Today’s episode of Full Court Finance at Zacks explores the wave of stock market volatility to start 2023 and where the market stands as we head into the heart of fourth quarter earnings season. The episode then breaks down three highly-ranked dividend-paying stocks that have upped their earnings guidance amid the economic slowdown that investors might want to buy right now.
The stock market ripped higher through late afternoon trading on Friday to snap the recent downturn. The big comeback extends a recent wave of market volatility that saw stocks get off to a hot start in 2023, only to slip again.
The S&P 500 finally broke the 4000 level early Wednesday after it climbed above its 200-day moving average for the second time in the last two months. But the bears quickly took over and sent the S&P back below both its 200-day and 50-day.
Thankfully, the bulls didn’t give up so easily and quickly pushed the benchmark back above its 50-day on Friday. The recent up and down movement makes sense as Wall Street struggles to price in the early earnings data and guidance, as well as what the Fed will do next.
The possibility of a recession, higher interest rates, and fading earnings will likely remain a cloud over the market for at least the near-term future. But staying on the sidelines comes with a cost. Plus, many stocks are easily outperforming the market and looking strong for 2023.
Darden Restaurants, Inc., (DRI) is a restaurant chain standout with over 1,800 restaurants and counting that include Olive Garden, LongHorn Steakhouse, Yard House, and The Capital Grille. Darden’s sales soared in its FY22 and its growth outlook remains strong as it is able to successfully raise prices to help offset its surging costs without scaring off customers.
DRI topped our Q2 FY23 earnings and revenue estimates in mid-December and provided slightly higher guidance, which is no easy task at the moment. Darden’s bottom-line positivity helped it land a Zacks Rank #2 (Buy) right now. Its dividend yields 3.2% and it is still in the midst of a large repurchase program. And DRI stock hit new highs earlier this month.
VICI Properties Inc. (VICI) is the real estate investment trust behind Caesars Palace Las Vegas, MGM Grand, The Venetian Resort Las Vegas, and other high-profile casinos and resorts. VICI boosted its portfolio over the last several years and it closed a big deal in early January. VICI is a true giant in the casino, resorts, nightlife, and convention world.
Zacks estimates call for its earnings and revenue to surge both this year and next and its positive bottom-line revisions help it land Zacks Rank #2 (Buy). VICI’s dividend yields 4.7% to top its industry and blow away the 10-year U.S. Treasury. Plus, VICI shares have soared 23% in the last 12 months.
NRG Energy, Inc. (NRG) is a utility powerhouse that’s poised to roll out more digital-focused efforts as electrical grids, homes, and businesses grow more connected and high-tech by the day. NRG announced on December 6 that it agreed to buy Vivint Smart Home for $12 per share or $2.8 billion in an all-cash deal.
The diversified NRG will soon boast a network of approximately 7.4 million customers and be able to bundle offerings for utilities, home security, automation, and more for a smart home future. NRG’s post-Vivint announcement selloff has it trading around 33% below its highs and its valuation levels are stellar. NRG’s dividend currently yields 4.5% to crush its industry, and its upward earnings revisions have earned NRG a Zacks Rank #1 (Strong Buy).
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