3 Stocks in Focus That Declared Dividend Hikes Amid Economic Woes
Turbulence has gripped Wall Street, with investors fearing that the Federal Reserve could go for more rate hikes this year as inflation continues to weigh on the economy. Oil prices are surging again as tensions in the Middle East cease to end.
Traders fear that if the tensions continue for longer, oil prices could rise further, which will push inflation up. As market uncertainty persists, conservative investors looking for assured income and a degree of protection from market volatility may consider dividend-paying stocks.
Dividend stocks can offer steady income through regular payouts while providing more stability during periods of heightened market volatility. Here are three dividend stocks investors may want to consider: First United Corporation FUNC, Fifth Third Bancorp FITB and McDonald's Corporation MCD.
More Rate Hikes Likely
The Federal Reserve hiked interest rates by a quarter percentage point at the end of its two-day FOMC meeting last week, taking the target range to 3.75% to 4%. The central bank's Federal Open Market Committee unanimously approved the rate increase in a 12-0 vote.
This was also the first rate hike by the Fed in over three years. Although the decision was widely anticipated, markets have remained largely volatile, as the Fed suggested that there could be more rate hikes this year because inflation remains a major challenge.
Earlier this week, Federal Reserve Governor Michael Barr said that the central bank needs to make “policy adjustments” to fight sky-high inflation.
Ongoing tensions in the Middle East have resulted in a steep rise in crude prices. Tensions escalated over the weekend as the United States threatened to intensify attacks on Iran. Although President Donald Trump said earlier this week that an Iranian delegation talked with U.S. officials for three hours and had a “good meeting,” a deal between the two warring nations has not been reached.
High prices have already been affecting consumer spending. More interest rate hikes will push borrowing costs higher, shrinking the purchasing power of consumers further.
3 Stocks That Recently Announced Dividend Hikes
First United Corporation
First United Corporation is a one-bank holding company with two non-bank subsidiaries. FUNC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Sept. 23, First United Corporation announced that its shareholders would receive a dividend of $0.28 a share on Nov. 2. FUNC has a dividend yield of 2.43%. Over the past five years, First United Corporation has increased its dividend five times, and its payout ratio presently sits at 24% of earnings. Check First United Corporation’s dividend history here.
Fifth Third Bancorp
Fifth Third Bancorp operates 1,500 full-service banking centers and 2,648 ATMs in 15 states throughout the Midwest, Southeast and Southwest regions of the United States. FITB classifies its operations into three reportable business segments: The Commercial Banking segment provides credit intermediation, cash management and financial services to large and middle-market businesses, government entities and professional customers. Its offerings include lending and deposit. Fifth Third Bancorp has a Zacks Rank #3.
On Sept. 17, Fifth Third Bancorp declared that its shareholders would receive a dividend of $0.42 a share on Oct. 15. FITB has a dividend yield of 3.10%. Over the past five years, Fifth Third Bancorp has increased its dividend six times, and its payout ratio presently sits at 41% of earnings. Check Fifth Third Bancorp’s dividend history here.
McDonald's
McDonald's Corporation is a leading global foodservice retailer with more than 45,000 restaurants in over 100 countries. MCD mainly operates and franchises quick-service restaurants under the McDonald’s brand. Approximately 95% of its restaurants worldwide are owned and operated by independent local business owners. McDonald's carries a Zacks Rank #3.
On Sept. 17, McDonald's announced that its shareholders would receive a dividend of $1.93 a share on Dec. 15. MCD has a dividend yield of 3.12%. Over the past five years, McDonald'shas increased its dividend six times, and its payout ratio presently sits at 59% of earnings. Check McDonald's dividend history here.
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McDonald's Corporation (MCD) : Free Stock Analysis Report
First United Corporation (FUNC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
