Diversify With Three Non-Cyclical Stocks Paying Dividends

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Last week's disappointing jobs report raised fresh concerns about the U.S. economy's recovery, as the Dow and the S&P 500 extended losses to a fifth day on Tuesday. After increases of 240,000 in February and 275,000 in January, payroll jobs in March advanced a modest 120,000.

Coming off a period of towering optimism can be problematic. Investors cannot control the cycles of the economy, but they can adjust their investment practices and diversify by adding more non-cyclical stocks to their portfolio. While cyclical stocks are highly correlated to the economy, non-cyclical stocks repeatedly outperform the market when economic growth slows.

Three Non-Cyclical Stocks Paying Dividends:

Coca-Cola (NYSE: KO)

The world's largest soft drink company, Coca-Cola is an obvious fit for this list. Currently yielding 2.8 percent, Coco-Cola has a solid history of growing dividends over time. This year, Coca-Cola raised its annual dividend to $2.04 per share increasing 8.5 percent from last year.

On March 29, the company inaugurated the opening of Coca-Cola China's 42nd bottling plant located in Yingkou, Liaoning, the largest Coca-Cola production facility in China. Maintaining double-digit growth in nine of the last ten years, China is one of the fastest growing markets for Coca-Cola with volume expanding by 13 percent in 2011. Consumption of Coca-Cola products in China now represents approximately 8 percent of the company's global volume.

The company’s dominant market share positions around the world and its strong balance sheet keeps Coca-Cola ahead of the peers. Coca-Cola’s portfolio worth $10,000 five years ago is worth over $17,000 today.

General Mills (NYSE: GIS)

Known for its Big G cereals and Betty Crocker desserts and baking mixes, this major producer of packaged consumer foods offers the opportunity to earn 3.10 percent dividend yield.  General Mills has a strong brand position, which keeps this company ahead of competition from less expensive private label products.

Earlier this month, General Mills was named in Forbes as “The Most Reputable Company in America,” recognizing the company’s strong global reputation.

“We sometimes refer to reputation as the immediate feeling that people have about a company when they hear the company’s name,” Anthony Johndrow, managing partner at Reputation Institute, told Forbes. “That feeling is based on both rational and emotional underlying causes, and influences how you act in support of that company as well as your purchasing decisions.”

General Mills is a relatively safe stock with long-term growth and stability in earnings and dividends. In the last 50 years, the company’s total return to shareholders has exceeded the overall market performance. General Mills' portfolio worth $10,000 five years ago is worth over $15,000 today.

Heinz (NYSE: HNZ)

Major producer of a wide variety of food products worldwide, Heinz primarily offers condiments, convenience meals, and snacks.  In February, Heinz reported third quarter 2012 earnings of 95 cents per share beating last year's third quarter results by 13 percent.

The acquisition of the Quero business in 2011, which has annual sales of approximately $325 million, accelerates Heinz’s growth in Latin America and gives the company its first major business in Brazil, the world’s fifth most populated nation. Heinz also continues to benefit from its 2010 acquisition of Foodstar, a leading maker of premium soy sauce and fermented bean curd. With annual sales of almost $100 million, Foodstar provides a solid platform in China’s rapidly growing $2 billion-plus retail soy sauce market.

Heinz is currently yielding 3.6 percent with an annual dividend rate of $1.92. Heinz’s portfolio worth $10,000 five years ago is worth over $13,000 today.


Motley Fool newsletter services recommend H.J. Heinz Company and The Coca-Cola Company. The Motley Fool owns shares of The Coca-Cola Company. FarahLalani is long GIS. 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.

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