The S&P 500 is one of the most widely used benchmarks, comprising 500 of the largest publicly traded American companies from various industries. Despite concerns about a potential economic downturn, the S&P 500 has shown gains of 7.8% year-to-date and 15.5% over the past six months.
Despite the market volatility, I think investors could consider investing in quality dividend-paying S&P 500 stocks Bilead Sciences, Inc. (GILD) and Marathon Petroleum Corporation (MPC), which have gained 34.3% and 50% over the past year.
Despite Friday’s losses, the S&P 500, along with other major averages, posted solid weekly gains, yet another sign of resiliency for the stock market.
The S&P 500 is a popular gauge for the performance of the US stock market. Since 1950, the S&P 500 has averaged a full-year gain of 18.6%. Moreover, the S&P 500 was remarkably resilient in March, especially given the uncertainty radiating from the banking sector and tightening credit markets.
Moreover, the Consumer Price Index (CPI) dropped in March for the ninth consecutive month. As per the Bureau of Labor Statistics, prices rose 5% for the 12 months that ended in March, down from 6% in February.
However, inflation levels remain elevated and the US central bank is trying to battle it down to its 2% target. Fed fund futures show odds favor a 25 basis-point rate hike in May 2023.
Furthermore, according to notes from the Federal Reserve’s March policy meeting, the fallout from the recent banking crisis is likely to push the US economy into a mild recession later this year.
So, let's dive deeper into the fundamentally solid stocks mentioned above:
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally.
On April 16, 2023, GILD announced positive results from several COVID-19 clinical and real-world evidence studies at the 33rd European Congress of Clinical Microbiology & Infectious Diseases. A Phase 3 clinical study demonstrated that Veklury (remdesivir) was generally well tolerated in people with moderate to severe renal impairment.
On March 20, GILD announced that it had exercised its option to exclusively license Nurix’s investigational targeted protein degrader molecule NX‑0479.
This bivalent degrader, designated GS-6791, is the first development candidate resulting from the previously announced Nurix-Gilead collaboration to discover, develop, and commercialize a pipeline of innovative targeted protein degradation therapies.
GILD’s forward P/S multiple of 3.88 is 7.1% lower than the industry average of 4.17. Its forward EV/EBITDA multiple of 9.01 is 31.7% lower than the industry average of 13.18.
Recently, GILD announced an increase of 2.7% in the company’s quarterly cash dividend, beginning in the first quarter of 2023. The expansion will result in a quarterly dividend of $0.75 per share of common stock and was payable on March 30.
GILD pays $3.00 annually as dividends. This translates to a yield of 3.61% at the current market price, compared to the four-year average dividend yield of 4.00%. Its dividend payments have grown at CAGRs of 4.6% and 6.7% over the past three and five years, respectively.
GILD’s total revenues increased 2% year-over-year to $7.39 billion in the fourth quarter, which ended December 31, 2022. The company's non-GAAP net income increased 143.2% year-over-year to $2.11 billion, while non-GAAP EPS rose 142% year-over-year to $1.67.
Analysts expect GILD’s revenue for the fiscal second quarter ending June 2023 to be $6.48 billion, indicating a 3.6% year-over-year growth. The company’s EPS is expected to increase 9% from the prior-year quarter to $1.72 for the same quarter. Additionally, it has topped consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 34.3% over the past nine months to close the last trading session at $83. It has gained 4.1% over the past month.
GILD’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GILD also has an A grade for Value and Growth and a B for Sentiment and Quality. It is ranked first among 381 stocks in the Biotech industry.
To access additional ratings for GILD’s Stability and Momentum, click here.
Marathon Petroleum Corporation (MPC)
MPC operates as an integrated downstream energy company primarily in the United States. It operates in two segments, Refining & Marketing, and Midstream.
On March 8, MPC announced the acquisition of a 49.9% interest in LF Bioenergy, an emerging producer of renewable natural gas in the United States, from Cresta Fund Management for $50 million.
The agreement includes the potential for up to an additional $50 million based on achieving predetermined earn-out targets.
MPC’s forward EV/Sales of 0.57x is 69.4% lower than the industry average of 1.85x. Its forward P/S multiple of 0.40 is 69.7% lower than the industry average of 1.33.
MPC pays a $3 per share dividend annually, which translates to a 2.29% yield on the current price. Its dividend payments have grown at a CAGR of 7% and 10.4% over the past three and five years, respectively. The company has a four-year average dividend yield of 4.08%.
During the fiscal fourth quarter that ended December 31, 2022, MPC’s total revenues and other income increased 12.6% year-over-year to 40.09 billion. The company’s net income increased 229.5% year-over-year to $3.64 billion, and its net income per share increased 457% year-over-year to $7.13.
MPC’s EPS is expected to rise 280.4% year-over-year to $5.51 during the current fiscal quarter ending March 2023. The company’s revenue is expected to be $35.14 billion for the same fiscal quarter. Additionally, the stock has topped consensus EPS and revenue estimates in each of the trailing four quarters.
MPC’s shares have gained 62.1% over the past nine months to close its last trading session at $130.78. The stock gained 12.4% year to date.
MPC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has an A grade for Momentum and Quality and a B in Growth and Sentiment. Within the Energy - Oil & Gas industry, it is ranked #2 out of 91 stocks.
Beyond what is stated above, we’ve also rated MPC for Stability and Value. Get all MPC ratings here.
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GILD shares were trading at $83.49 per share on Monday morning, up $0.49 (+0.59%). Year-to-date, GILD has declined -1.82%, versus a 8.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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