In the last two years, the investment world has transitioned from slow growth, low inflation, and a low-interest-rate world to one with high-interest rates, fast growth, and high inflation.
Inflation rates are the highest they have been in the past 40 years, with Central Banks around the globe hiking rates to try and battle inflation.
Meanwhile, it seems as if the underinvestment in oil has caused major supply issues, which might be prolonged. Thus, higher interest rates and supply crunch should benefit value stocks, especially the financials. Following that, Finbold identified one blue-chip stock that pays dividends that should be in your portfolio.
Lincoln National (NYSE: LNC)
Lincoln National (NYSE: LNC) is an insurance company that is highly rated, but also one which missed on its latest earnings, causing volatility in the share price. Namely, the company had $4.69 billion in revenue, an increase of 3.5% year-on-year (YoY), which represented a miss of $110 million.
Similarly, earnings per share (EPS) were $1.66, representing a miss of $0.16, while $400 million was used to repurchase shares for the quarter. For the previous reporting period, the company showed solid growth through 2020 and 2021.
Finally, the management of the company expects LNC to continue growing at a 13.7% compound annual growth rate (CAGR) as well as return to its historical fair value of nine times earnings.
If this plays out as the management has presented, the company could deliver 200% total returns or 22% annually, taking into consideration the dividend yield, which currently sits at 2.51%, and if it increases in lockstep.
Year-to-date (YTD) shares are down over 21% and have been quite volatile during May. Right now, the shares are above the 20-day Simple Moving Averages (SMAs) but would possibly have to cross the $58 level to continue moving upwards.
Higher than usual volumes have been noted throughout May and June, possibly indicating that more volatility lies ahead.
Meanwhile, on Wall Street, analysts rate the shares as a moderate buy, predicting that the average price in the next 12 months will reach $67.90. This potential increase would mean that the shares would have to rise 24.84% from the current trading level of $54.39.
Investors worried about the recent volatility could enjoy the $0.45 quarterly dividend the company offers while waiting for the market to settle itself regarding the stock price of LNC. Meanwhile, the company seems poised to grow as it did in the previous years, despite the more recent earnings miss.
Long-term investors and income investors should keep an eye on this stock, as current volatility could provide them with a solid entry point to this dividend-paying blue-chip stock.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.