Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
This week the coronavirus outbreak took a toll on global stocks, as the epidemic unexpectedly burst in Italy, triggering fears over the global trade and economy.
First in the list is Lockheed Martin, the U.S. arms contractor that recently signed a new contract with the U.S. government for delivery of Sikorsky helicopters. Second inthe list is Walmart, which recently released its earnings report. Next is GlaxoSmithKline, the U.K.-based pharmaceutical giant that partnered with a Chinese company to test technology for a coronavirus vaccine. The list is closed by Nvidia.
Don’t forget to read our previous edition of trends here.
Lockheed Martin (LMT) has taken the first spot in the list these past two weeks with a 43% rise in viewership. Lockheed had a stellar 2019, appreciating 48% and comfortably beating the S&P 500, as the company’s results continued to improve on rising demand for defense equipment.
Lockheed has made a bet on its helicopter unit Sikorsky to continue sales growth as it hopes to double the unit in size over the next decade. Sales could rise as much as 9% in 2020, well ahead of its other businesses. The Sikorsky growth is driven by three government programs, namely a new presidential helicopter, a transport chopper for the Marine Corps, and a rescue helicopter for the Air Force.
Lockheed bought Sikorsky in 2015 from United Technologies, and while commercial demand for helicopters fell after the oil and gas industry hit a rough patch, the government boosted spending for its defense programs. Lockheed is pursuing two spending programs by the Pentagon that are worth around $100 billion.
On February 20, Sikorsky was awarded the contract for building six Presidential helicopters under a contract for the U.S. Navy for a total of 23 aircraft. The deliveries of the first six will begin in 2022 and the remaining production is expected to be delivered in 2022 and 2023.
In addition to strong stock price performance, Lockheed pays a strong dividend yield of 2.4%. The stock is going ex-dividend tomorrow.
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Walmart (WMT) has enjoyed a 27% advance in traffic these past two weeks, as the company recently reported weaker-than-expected fourth quarter results. Shares have fallen more than 2% so far this year, with the decline accelerating Monday as a result of a market selloff triggered by coronavirus fears.
Even without the expected disruption from the outbreak, Walmart results have been quite poor in the fourth quarter, largely due to weaker sales in toys, apparel, and video games during the holiday season. Protests in Chile also negatively impacted the business in the region.
While some areas of traditional retail have struggled, Walmart’s online sales surged 35% during the quarter, in part due to rising grocery orders. E-commerce sales growth for the year was 37%, higher than the 35% the company had expected. Online growth is forecasted to slow to 20% in fiscal 2021. One issue with the online business is its lack of profitability, as grocery delivery is expensive and sales growth of other products has been weak.
Walmart has a decent dividend yield of 1.86%, and is expected to go ex-dividend on March 19.
Another bit of positive news was the U.S. Food and Drug Administration’s acceptance of its submission of a supplemental new drug application for Zejula, a maintenance treatment for women with ovarian cancer. Preliminary results for the drug’s efficacy have been encouraging.
At the start of February, the firm reported an 8.6% increase in revenues, largely thanks to strong growth in its vaccines and consumer healthcare units. Meanwhile, net income rose 6.9% to $1.3 billion.
Shares in GlaxoSmithKline have declined nearly 12% so far this year, with the slump starting at the end of January. GlaxoSmithKline has a dividend yield of 4.75% and its payout ratio is 66%.
Check out our latest Best Dividend Stocks List here.
Nvidia (NVDA) has seen its traffic rise 15% these past two weeks, as the technology company’s stock had recently touched a record high before declining abruptly in the face of coronavirus fears.
Nvidia shares had crossed the $300 per share level in mid-February after the company reported a blowout earnings report thanks to strength in the data center. Revenues were up 41% year-over-year in the fourth quarter to $3.1 billion, while earnings per share grew by 66% to $1.53. On February 19, shares in Nvidia had been up 34%, as many analysts started to upgrade the stock. However, the stock erased some of the gains due to fears the coronavirus could lead to lower demand in 2020.
Since peaking at $314, shares in the company have tumbled more than 11% and now trade at around the $260 per share level.
Nvidia pays out around 11% of its earnings to shareholders, amounting to a dividend yield of 0.21%. The company has rewarded investors with strong stock price performance. Over the past five years, the stock appreciated five-fold.
The Bottom Line
Lockheed Martin is betting on its helicopter unit Sikorsky to drive growth and contracts from the U.S. government are likely to help it achieve that goal. Walmart stock declined as the company reported weaker-than-expected results for the fourth quarter.
GlaxoSmithKline teamed up with a Chinese partner to test a vaccine for the coronavirus. Meanwhile, Nvidia stock had appreciated strongly on strong results before erasing some of the gains due to the potential negative impact of the coronavirus.
Be sure to check out Dividend.com’s News section for next week’s Market Wrap and other great dividend investing news.
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