3 Consumer Staples Stocks that Feed You Dividends
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a highly volatile investing environment in which investors are faced with huge swings in the markets on a seemingly daily basis, it’s comforting to me to have a constant stream of dividends rolling in. Dividend checks will keep coming in no matter how the market is reacting to the daily headlines. In the pursuit of a portfolio with lower volatility and higher yield, I’m currently looking to food companies within the consumer staples sector for promising stocks. The investing premise for these three stocks is simple but true: people have to eat, no matter what the market does. These stocks have long histories of paying and raising dividends year in and year out, and may provide investors much-needed stability.
H.J. Heinz (NYSE: HNZ) produces its namesake line of ketchup. However, it also has brands in the frozen foods, soup, and infant nutrition products lines. Heinz was founded all the way back in 1869, and has raised its dividend for nine years in a row. The company has a $19 billion market value and a dividend yield of 3.5%, handily beating the yield on the broader market. The company has been executing very well on its growth strategy: fiscal 2012 revenues were a record $11.6 billion, propelled by 16% organic growth in the emerging markets. These emerging markets now account for more than 20% of the company’s sales and should provide investors earnings and dividend growth going forward.
Hormel Foods (NYSE: HRL) has a market capitalization of $9 billion and a dividend yield of about 2%. Hormel was founded in 1891, and has since sold its flagship Spam and Hormel Chili to consumers. However, the company has broadened its product portfolio over the years. The company holds the Jennie-O brand, and earlier this month announced the acquisition of the Skippy peanut butter line. Hormel has achieved annual earnings per share growth of 11% annually since 2007, and annual sales growth of 6% over the same period. Moreover, Hormel has an enviable dividend track record: the company has provided investors an astounding 47 consecutive years of dividend increases.
Campbell Soup (NYSE: CPB) is an $11 billion dollar company with a dividend yield in excess of 3%. The company has an operating history of more than 140 years. Campbell offers consumers its namesake soup products, as well as a diversified portfolio including the Pepperidge Farm and V8 brands. Although revenues and earnings were basically flat in 2012 versus 2011, Campbell did come through with a dividend increase. The company is in a period of transition, as it refocuses itself on expanding its global reach. The company expects to launch 50 new items in the United States in 2013, and the company is optimistic about its expanding presence in the emerging markets. Specifically, Campbell sees strong growth from its Indonesian and Latin American segments in the near future.
Each of these stocks provides consumers and income investors things they cannot live without: food and dividends, respectively. These three companies have been around for a century or more, and will likely be paying and raising dividends for many years to come. For investors tired of hanging on to every piece of market-rattling headline news, these stocks are worthy of further research.
rciura has no position in any stocks mentioned. The Motley Fool recommends H.J. Heinz Company. 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!