Selections for Growth and Income
Damon is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dividend yields have retreated for many stocks as the Dow has climbed. Still, investors can realize payout exceeding that of Treasury Bonds, while also watching their stock prices advance. Capital appreciation accompanying dividend income is the combination sought after in the following equities.
H.J. Heinz (NYSE: HNZ)
The food processing company’s earnings have been outperforming expectations, supporting stock price appreciation. Product price hikes domestically and volume gains internationally are providing a lift to sales. Plus, management is keeping input costs down, allowing margins to expand in spite of increased commodity costs. Its emerging geographical markets strategy is working well, with revenue gains being posted in the likes of Russia, Venezuela, and Brazil. Incidentally, too, the company’s famous ketchup continues to generate growing demand. Accordingly, share net is on pace to rise 5% to 10% in each of fiscal 2013 and 2014 (years end in April).
Indeed, Heinz’ specialty remains condiments and sauces, with the menu also consisting of frozen foods, soups, and other foods. The company lists emerging market growth, expansion of the portfolio of offerings, and strengthening of the global scale, among strategic pillars. Moreover, it is focused on improving productivity.
HNZ shares yield about 3.4%, and look poised for ongoing capital appreciation, making them a worthwhile choice for total return.
Tupperware Brands (NYSE: TUP)
Keeping with the theme of low-cost and home-cooked meals, Tupperware may be a stock to consider for upside price potential and dividend income. Like Heinz, the storage and personal care product maker thanks overseas regions for much of its recent profit growth. Specifically, Asia and South America have been engines for bottom-line increases this year. For 2013, management is guiding toward 5% - 7% revenue expansion, and this may well result in a bottom-line gain of around 10%. The shares, already having skyrocketed over the past several months, thus still have appeal for their near-term upside.
Tupperware’s brands include the namesake, as well as numerous beauty care names. Its product lines have evolved to include a substantial amount of cookware, such as rice makers and omelet makers. The beauty business contributes only about 14% of total sales. Notably, Europe is by far its largest market geographically. However, profitability there is weak and the tough conditions have been detrimental to results somewhat.
TUP will shortly declare its 2013 quarterly dividend. Last year it raised the payout 20%. Given a boost to the yield, the stock is in favor for its price upside and income. The concern is if the shares have peaked and a selloff will ensue.
British American Tobacco (NYSEMKT: BTI)
Tobacco stocks are known for consistent dividends and British American typically offers generous payouts. In fact, BTI yields around 4.1% and is consistently raising its distribution. Plus, the company’s earnings profile is sound. Share net could well advance 10% in 2013 behind volume gains and accretion resulting from a share buyback program. In all, BTI is a solid addition to any current income portfolio.
The equities of dividend-paying stocks that also have growth potential might well be in favor even as the market takes on heightened levels of risk this year. This is seen in the price run ups of the likes of HNZ and TUP last year. If you are seeking relatively safe investments offering income streams and likely capital appreciation, such stocks are worth purchasing and holding.
dctotal has no position in any stocks mentioned. The Motley Fool recommends H.J. Heinz Company. The Motley Fool owns shares of Tupperware Brands. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!