Both stocks are holding near 52-week highs and offer solid long-term dividend growth, giving investors a steady income stream while minimizing the risk of a sharp drop in their share prices. Superior earnings stability underpins the strength of both stocks.
Tobacco giant Altria is just 5% off its high as it shapes a base-on-base pattern with a buy point at 61.84. Its Relative Strength line is near new highs, a bullish sign.
Coca-Cola, the world’s biggest beverage maker, is just 4% off its 52-week high as it works on a long consolidation with resistance at around 45. By contrast, the S&P 500 has fallen 9% from its May 20 peak and is now well below its 10-week average.
Both stocks boast a three-year earnings stability factor of 1 on a scale of zero (most stable) to 99 (least stable), which has supported solid dividend growth.
Coca-Cola has increased its dividend for 50 straight years and has a long-term dividend growth rate of 9%. Altria, whose dividend growth rate is 8%, has increased its payout 49 times in the past 46 years.
Altria will report Q4 and full-year results Jan. 28. The maker of cigarettes under brands such as Marlboro and Virginia Slims is expected to post a 3% increase in Q4 profit to 68 cents a share on a gain of more than 2% in sales to $4.73 billion. For all of 2015, analyst forecast a 9% increase in profit to $2.81 a share, to be followed by another 9% increase this year.
Coca-Cola will release its Q4 and full-year results Feb. 9. Profit for the quarter is expected to slide 16% to 37 cents a share on a 9% decline in sales to $9.94 billion amid a strong dollar. For 2015, profit likely dipped 2% to $1.99 a share, but analysts expect EPS to rise 4% this year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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