2 Large-Cap Stocks Raising Their Dividend

September saw a big jump in volatility concerns over rising inflation and the Fed’s potential tightening. It could be wise to bet on large-cap dividend-paying stocks for steady returns in such an environment. Established large-cap dividend stocks Accenture (CAN) and McDonald’s (MCD) are worth considering now, given their stable financials and cash flows. Let’s discuss.

The stock market is experiencing substantial volatility due to concerns over rising inflation, the ongoing debt crisis at China's real estate giant Evergrande, and the Fed's signal of monetary stimulus withdrawal. The CBOE volatility index (VIX) has increased 34% over the past month and 22% over the past five trading days.

Because the stock market is expected to remain volatile for the foreseeable future, it may be prudent to invest in large-cap dividend-paying stocks to ensure a steady stream of income. Large-cap stocks typically possess sufficient financial resources to absorb market shocks and deliver stable returns.

Therefore, we believe quality large-cap dividend-paying stocks Accenture Plc (ACN) and McDonald’s Corporation (MCD) could be solid bets now to dodge the short-term market fluctuations.

Accenture Plc (ACN)

With a market cap of $204.67 billion, ACN is a global professional services company specializing in strategy, consulting, interaction, technology, and operations. In addition, it has an agreement with Duke Energy Corporation to develop a technological platform that will allow it to detect actual baseline methane emissions from natural gas distribution systems.

This month, ACN announced its intention to acquire Experity, a prominent cloud-based customer experience, and commerce solutions supplier in Brazil. With this acquisition, the company intends to use Experity's expertise and ACN Interactive’s global scale and capabilities to strengthen its ability to provide seamless commerce experiences.

Also, this month, ACN and IonQ have teamed up to speed quantum computing business experiments in organizations globally. ACN's quantum expertise and ability to build and develop customized industry solutions suited to IonQ's quantum computing technology will enable more businesses to innovate and become quantum-ready.

ACN’s revenue increased 23.9% year-over-year to $13.42 billion in the fourth quarter ended August 31, 2021. Its operating income grew 26.8% from the year-ago value to $1.96 billion. The company’s net income surged 10% from the prior year quarter to $1.42 billion, while its EPS increased 10.6% year-over-year to $2.2 over this period.

The company’s EPS is expected to grow 15.4% year-over-year to $8.68 in fiscal 2021. Analysts expect ACN’s revenue to increase 13.4% year-over-year to $49.01 billion in the current year. The stock has gained 44.4% over the past year and 23.9% year-to-date.

ACN’s annual dividend of $3.88 yields 1.2% on its current stock price. On September 23, the company approved a $0.97 quarterly dividend, payable on November 15. It has a four-year average dividend yield of 1.5%.

ACN's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.

ACN has also rated a B grade for Momentum, Sentiment, and Quality. Within the A-rated Outsourcing – Tech Services industry, it is ranked #4 of 11 stocks.

To see additional POWR Ratings for Growth, Value, and Stability for ACN, click here.

McDonald’s Corporation (MCD)

MCD, a prominent global foodservice retailer, operates and franchises over 39,000 McDonald’s restaurants worldwide. U.S. International Lead Markets, High Growth Markets, Foundational Markets, and Corporate are among the company's target markets. It has a market cap of $182.43 billion.

During the second quarter ended June 30, 2021, MCD’s total revenue increased 57% year-over-year to $5.89 billion. Its operating income grew 180% from the year-ago value to $2.69 billion, while its net income surged 358.7% year-over-year to $2.22 billion over this period. The company’s EPS increased 353.9% from the year-ago value to $2.95.

The consensus EPS estimate of $9.08 for the current year represents a 50.1% improvement year-over-year. Analysts expect MCD's revenue to increase 19.6% year-over-year to $22.98 billion in fiscal 2021. The stock has gained 11.7% over the past year and 14.8% over the past nine months.

MCD approved a quarterly dividend of $1.38 on September 23, payable on December 15. While the four-year average dividend yield for MCD is 2.4%, the current dividend translates to a 2.3% yield.

MCD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Quality, and a B for Sentiment and Stability. In the A-rated Restaurants industry, it is ranked #19 of 46 stocks.

In total, we rate MCD on eight different levels. Beyond what we've stated above, we have also given MCD grades for Growth, Momentum, and Value. Get all the MCD ratings here.

ACN shares were trading at $319.92 per share on Thursday afternoon, down $3.61 (-1.12%). Year-to-date, ACN has gained 23.62%, versus a 15.90% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.


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