After all the stock market's twists and turns in recent years, investors may have been hoping for a calmer start to 2022. That hasn't exactly panned out. The market is off to a volatile start this year, and many growth-dependent stocks have been particularly hard hit. As a result, you may be wondering what comes next.
In order to help take some of the edge off and put you on to some quality stocks, three Motley Fool contributors profiled one of their favorite sturdy dividend plays. Read on to see why they think that investing in MetLife (MET -0.60%), Hanesbrands (HBI -1.91%), and UPS (UPS -0.20%) can help shore up your financial future and put you at ease in 2022.
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Insurance was, is, and will be a reliable business
James Brumley (MetLife): The insurance industry is still shaking off the 2020 volatility created by the pandemic. Likewise, investors are trying to figure out how these companies should be priced.
MetLife is no exception to this dynamic. The stock's been all over the map for the past year, but right now, it's back where it was in March.
Investors who can see past the fog, though, will notice that not much has changed for the company's life insurance and annuity businesses. People continue to need this sort of protection, and companies need to offer retirement benefits to employees. MetLife offers a wide array of both.
We do know that earnings are poised to fall a fair amount in fiscal 2022 on the heels of a slight lull in revenue. I suspect that's why the market's been hesitant to bid it up any higher than it has -- because people are worried it's a sign of a bigger headwind.
What's not being fully appreciated about that expected earnings lull, however, is that it's being compared to an unusually profitable 2021. The long-term growth trend is still intact, even if it's slow moving, and analysts are looking for more of the same sort of growth beyond 2022.
What shocks me is that so many investors have yet to connect these dots. You can step into Metlife here while the dividend yield's a juicy 3% and the stock's priced at only around nine times this-year's projected per-share profits.
This underappreciated stock could be a champion
Keith Noonan (Hanesbrands): While Hanesbrands probably won't win any awards for being exciting, there's actually a lot to like about the business, and its stock looks very attractively valued at current prices. Shares trade at less than nine times this-year's expected earnings and roughly 0.85 of expected sales. They also sport a dividend yield of roughly 3.5%.
The company's Hanes namesake is a top brand in socks, underwear, and shirts. These might not be the flashiest product categories under the sun, but they're dependable staples, and the company's performance has held up pretty well, even amid competition and commodification.
Founded all the way back in 1901, Hanesbrands is still a well-managed company today and has proven surprisingly adept and versatile amid the challenges created in the pandemic era. The company quickly pivoted to the production of masks and personal-protective equipment, helping to offset the very difficult retail climate. In the company's most recent quarter, sales grew 6% year over year, or 18% on a comparable basis after factoring out the contribution from the PPE production it's no longer involved with.
The company also has some divisions and products that could help deliver better-than-expected growth, most notably, its Champion clothing brand -- which grew sales 33% year over year and 20% compared to Q3 in 2019. The company's hottest growth driver is back to posting best-ever quarterly performance. It seems clear at this point that Champion has long-term staying power and expansion potential.
With its substantial dividend yield, low price-to-earnings multiple, and solid underlying business, Hanesbrand is a worthwhile value stock that looks well-positioned to weather volatility and outperform the market's expectations.
Carrying forward the momentum to 2022
Daniel Foelber (UPS): We're only a week into 2022, and the stock market is already feeling like a roller coaster. After doubling in the last three years, the S&P 500 may have a tough time keeping up its torrid growth rate amid higher interest rates, inflation, the omicron COVID-19 variant, and valuation concerns.
UPS is one company that continues to show its strength. In fact, its stock price is now within just a couple of percentage points of its all-time high.
The company will report its Q4 2021 and full-year results on Feb. 1. It's a highly anticipated report, as UPS will have to lap its record-high 2020 performance.
A big difference between UPS and the majority of industrial stocks is that its business has thrived since the onset of the pandemic. The company surprised Wall Street when it proved it could more than offset declines from its business-to-business segment with gains from its residential business, international segment, and freight.
UPS carried forward that momentum into 2021. In the nine months ended Sept. 30, 2021, UPS generated $69.52 billion in revenue, up 16.4%, compared to the nine months ended Sept. 30, 2020. It also booked $8.92 billion in operating profit and $9.20 billion in free cash flow, up 57.9% and 51.7%, respectively, from the comparable period.
What really has investors excited about UPS is that it's guiding for a 2021 full-year 13% consolidated adjusted operating margin. Put another way, UPS is now growing its top line at a breakneck pace, while also improving its profitability, giving it both growth and value.
The company's efficient business underpins the future of e-commerce. UPS is in its best shape ever, the industry-leading package-delivery company, and sports a 1.9% dividend yield. Investors could do well to consider UPS in 2022 and beyond.
