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4 Great Dividend Stocks in the Consumer Staples Sector
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The consumer staples sector has been performing really well among most product categories over the past few months, despite tepid economic figures, Brexit aftershocks, the Federal Reserve’s reluctance to hike rates and other global growth issues.
Further, lower gas prices and increasing consumer confidence are doing the trick for these stocks. Also, the sector has the potential to counter headwinds stemming from the global market turmoil and continued volatility in the equity market.
We note that the GDP has expanded at a slower rate in the second quarter than earlier estimated, thus leading to concerns about the health of the economy. However, the largest contributor to U.S. GDP, consumer spending, experienced a significant upward revision. In fact, there is enough evidence to suggest that a strong rebound is likely in the third quarter, owing to improved residential construction and strong labor market conditions. Meanwhile, the reduction in business inventories, the primary culprit when it comes to a fall in estimated GDP, is expected to give a boost to the industry as it will result in a buildup of fresh inventories.
The Winning Strategy
In the face of prevailing economic conditions, we believe investors should be very careful about their strategy. Thus, investing in the consumer staples stocks is safe because of their defensive nature.
With the U.S. economy picking up steam, investors should venture into dividend stocks. Not only do these stocks offer higher income in the current low-rate environment but also provide a cushion against equity market risks.
Moreover, dividend stocks are historically less volatile and are proven outperformers over the long term. These stocks are a safe bet as dividends generally act as a hedge against economic uncertainty.
4 Dividend-Yielding Consumer Stocks to Add to Your Portfolio Now
The following stocks are good bets as all of them offer a dividend yield of above 2% and flaunt a solid Zacks Rank. These consumer staples stocks provide generous dividends and possess upside potential.
Delaware-based Kimberly-Clark has a Zacks Rank #3 (Hold) and a dividend yield of 2.86%. It is one of the leading players in several consumer product categories including diapers, paper goods, and female personal care.
The company is cash rich and has a consistent track record of returning cash to shareholders in the form of dividend payments and share buybacks. It returned $2.1 billion in 2015, $3.3 billion in 2014 and $2.4 billion in 2013 to shareholders through share repurchases and dividends.
For 2016, the company expects to repurchase shares worth $600−$900 million. It also expects to increase the dividend at a mid single-digit rate, consistent with the 5% growth in adjusted earnings per share delivered in 2015.
The company has increased its annual dividend for 44 consecutive years, including 4.5% in 2016, 4.8% in 2015, 3.7% in 2014, 9% in 2013, 9.5% in 2012 and 6% in 2011.
Marlboro maker, Altria Group is one of the leading manufacturers of cigarettes and smokeless tobacco products in the U.S.
Altria boasts a solid balance sheet and regular shareholder returns. This Zacks Rank #3 company has consistently raised its dividend and has a dividend yield of 3.42%. Last Friday, Altria Group’s board announced an 8% hike in its quarterly dividend to 61 cents per share. The new dividend will be paid on Oct 11, to shareholders on record as of Sep 15, 2016.
The cigarette maker regularly returns value to shareholders and since the spin-off of Philip Morris International Inc. (PM - Free Report) in 2008, the company has raised its dividend 50 times in 47 years. Also, the company has a dividend payout ratio target of around 80% of adjusted earnings per share.
OH-based Smucker is the leading marketer of jams, jellies, preserves, and other fruit spreads in the U.S. It currently holds a Zacks Rank #3.
The company has been increasing its rate of quarterly and annual dividends consistently. Last month, the board of Smucker approved a quarterly dividend hike of 12.0%, thereby maintaining the trend of rewarding its shareholders consistently. The new dividend of 75 cents marks an increase from the previous quarterly dividend of 67 cents per share. Also, this dividend hike represents the fifteenth consecutive year of dividend growth. Currently, the food company has a dividend yield of 2.12%.
Apart from increasing dividends, Smucker also repurchases shares consistently. In fiscal 2016, the company reduced its total debt by nearly $750 million, reflecting strong free cash flow. It also returned over $750 million of cash to shareholders in the form of share repurchases and dividends.
NJ-based Pinnacle Foods has a Zacks Rank #2 (Buy) and a dividend yield of 2.24%. It is a manufacturer, marketer and distributor of branded food products, primarily in North America.
Pinnacle Foods regularly enhances shareholder value through dividend payouts.
On Aug 17, the company’s board approved a quarterly dividend hike of 12% to 28.5 cents per share. The new dividend is payable on Oct 10, 2016, to shareholders of record as of Aug 30. The raise brings the annualized dividend to $1.14 per share, implying an increase from the previous annualized rate of $1.02 per share.
The recent announcement reflects the company’s strong cash position. Notably, this was the fourth dividend increase by Pinnacle Foods since the initiation of its quarterly dividend program shortly after its IPO in Mar 2013. The last dividend hike of 8.5% to 25.5 cents per share was announced in Sep 2015.
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
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4 Great Dividend Stocks in the Consumer Staples Sector
The consumer staples sector has been performing really well among most product categories over the past few months, despite tepid economic figures, Brexit aftershocks, the Federal Reserve’s reluctance to hike rates and other global growth issues.
Further, lower gas prices and increasing consumer confidence are doing the trick for these stocks. Also, the sector has the potential to counter headwinds stemming from the global market turmoil and continued volatility in the equity market.
We note that the GDP has expanded at a slower rate in the second quarter than earlier estimated, thus leading to concerns about the health of the economy. However, the largest contributor to U.S. GDP, consumer spending, experienced a significant upward revision. In fact, there is enough evidence to suggest that a strong rebound is likely in the third quarter, owing to improved residential construction and strong labor market conditions. Meanwhile, the reduction in business inventories, the primary culprit when it comes to a fall in estimated GDP, is expected to give a boost to the industry as it will result in a buildup of fresh inventories.
The Winning Strategy
In the face of prevailing economic conditions, we believe investors should be very careful about their strategy. Thus, investing in the consumer staples stocks is safe because of their defensive nature.
With the U.S. economy picking up steam, investors should venture into dividend stocks. Not only do these stocks offer higher income in the current low-rate environment but also provide a cushion against equity market risks.
Moreover, dividend stocks are historically less volatile and are proven outperformers over the long term. These stocks are a safe bet as dividends generally act as a hedge against economic uncertainty.
4 Dividend-Yielding Consumer Stocks to Add to Your Portfolio Now
The following stocks are good bets as all of them offer a dividend yield of above 2% and flaunt a solid Zacks Rank. These consumer staples stocks provide generous dividends and possess upside potential.
Kimberly-Clark Corporation (KMB - Free Report)
Delaware-based Kimberly-Clark has a Zacks Rank #3 (Hold) and a dividend yield of 2.86%. It is one of the leading players in several consumer product categories including diapers, paper goods, and female personal care.
The company is cash rich and has a consistent track record of returning cash to shareholders in the form of dividend payments and share buybacks. It returned $2.1 billion in 2015, $3.3 billion in 2014 and $2.4 billion in 2013 to shareholders through share repurchases and dividends.
For 2016, the company expects to repurchase shares worth $600−$900 million. It also expects to increase the dividend at a mid single-digit rate, consistent with the 5% growth in adjusted earnings per share delivered in 2015.
The company has increased its annual dividend for 44 consecutive years, including 4.5% in 2016, 4.8% in 2015, 3.7% in 2014, 9% in 2013, 9.5% in 2012 and 6% in 2011.
KIMBERLY CLARK Dividend Yield (TTM)
KIMBERLY CLARK Dividend Yield (TTM) | KIMBERLY CLARK Quote
Altria Group, Inc. (MO - Free Report)
Marlboro maker, Altria Group is one of the leading manufacturers of cigarettes and smokeless tobacco products in the U.S.
Altria boasts a solid balance sheet and regular shareholder returns. This Zacks Rank #3 company has consistently raised its dividend and has a dividend yield of 3.42%. Last Friday, Altria Group’s board announced an 8% hike in its quarterly dividend to 61 cents per share. The new dividend will be paid on Oct 11, to shareholders on record as of Sep 15, 2016.
The cigarette maker regularly returns value to shareholders and since the spin-off of Philip Morris International Inc. (PM - Free Report) in 2008, the company has raised its dividend 50 times in 47 years. Also, the company has a dividend payout ratio target of around 80% of adjusted earnings per share.
ALTRIA GROUP Dividend Yield (TTM)
ALTRIA GROUP Dividend Yield (TTM) | ALTRIA GROUP Quote
The J. M. Smucker Company (SJM - Free Report)
OH-based Smucker is the leading marketer of jams, jellies, preserves, and other fruit spreads in the U.S. It currently holds a Zacks Rank #3.
The company has been increasing its rate of quarterly and annual dividends consistently. Last month, the board of Smucker approved a quarterly dividend hike of 12.0%, thereby maintaining the trend of rewarding its shareholders consistently. The new dividend of 75 cents marks an increase from the previous quarterly dividend of 67 cents per share. Also, this dividend hike represents the fifteenth consecutive year of dividend growth. Currently, the food company has a dividend yield of 2.12%.
Apart from increasing dividends, Smucker also repurchases shares consistently. In fiscal 2016, the company reduced its total debt by nearly $750 million, reflecting strong free cash flow. It also returned over $750 million of cash to shareholders in the form of share repurchases and dividends.
SMUCKER JM Dividend Yield (TTM)
SMUCKER JM Dividend Yield (TTM) | SMUCKER JM Quote
Pinnacle Foods Inc.
NJ-based Pinnacle Foods has a Zacks Rank #2 (Buy) and a dividend yield of 2.24%. It is a manufacturer, marketer and distributor of branded food products, primarily in North America.
Pinnacle Foods regularly enhances shareholder value through dividend payouts.
On Aug 17, the company’s board approved a quarterly dividend hike of 12% to 28.5 cents per share. The new dividend is payable on Oct 10, 2016, to shareholders of record as of Aug 30. The raise brings the annualized dividend to $1.14 per share, implying an increase from the previous annualized rate of $1.02 per share.
The recent announcement reflects the company’s strong cash position. Notably, this was the fourth dividend increase by Pinnacle Foods since the initiation of its quarterly dividend program shortly after its IPO in Mar 2013. The last dividend hike of 8.5% to 25.5 cents per share was announced in Sep 2015.
PINNACLE FOODS Dividend Yield (TTM)
PINNACLE FOODS Dividend Yield (TTM) | PINNACLE FOODS Quote
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>