Why Not Own These Defensive Stocks During The Current Market Uncertainty?
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As investors continue to experience market uncertainty surrounding the Presidential Election and “Fiscal cliff,” they are left scratching their heads wondering where is the best place to put their investment capital to work. Historically speaking, consistent, stable industries are justifiably more coveted and there are few industries that fit that bill better than food and beverage; after all, people need to eat and drink regardless of their financial situation. The following are stocks that match that investment philosophy, while dishing out attractive dividend yields; hopefully this will serve as a nice starting point in your investment research.
Diversified food giant General Mills (NYSE: GIS) is a company that makes everything from cereal to frozen vegetables to ice cream, and has been doing that since its founding in Minnesota in 1928. The firm is simply a giant, with a trailing twelve month revenue base nearing $17 billion and a market capitalization exceeding $25 billion. With the average S&P 500 stock yielding 2%, the 3.3% dividend yield of General Mills has my attention, along with the fact that the company has a consistent business that should further benefit with the rise of the global middle class and the hundreds of millions of consumers that will bring on-board. Add in the fact that the company has a rather low 49% dividend payout ratio and investors should feel confident that the great dividend is not only safe, but likely to rise in the coming future.
Competitor Kellogg (NYSE: K) is a nice company to diversify one’s GIS holding with, as the company has many of the same attributes. Having a strong revenue base exceeding $13 billion and market capitalization nearing $19 billion allows Kellogg to benefit from great economies of scale. Add in the fact that the company has a great 3.4% dividend yield and a low 52% payout ratio, while benefiting from the same growth drivers going forward, and I think both of these firms make for solid holdings.
Beverage giant Dr. Pepper Snapple Group (NYSE: DPS) is well-known for its namesake brand, along with having other diversified drinks, such as 7UP, Schweppes, and Canada Dry. The company has performed well lately, exceeding consensus estimates in three of the last four quarters, while its revenue base has hit $6 billion the past twelve months. Perhaps most notably, the company yields an attractive 3.1% dividend, which has consistently been raised during the economic carnage of the last 4-5 years. With a current 47% payout ratio, investors should feel confident that will continue.
Dr. Pepper competes with Coca-Cola (NYSE: KO) and Pepsico (NYSE: PEP), both of which offer diversified holdings that have either met or exceeded consensus analyst estimates the past four quarters. Both companies have attractive dividend yields at about 3%, and both of these companies have payout ratios well below 60%, giving investors strong reason to believe that the dividends will not only continue to be paid, but hiked in the near future.
I’d like to also say I appreciate you reading my thoughts and reiterate that these are just the views of the blogger and should not serve as a substitute for any professional financial advice or counsel in general. Respectful comments and questions are always welcome below on the comment board.
Wiseinvestors has no positions in the stocks mentioned above. The Motley Fool owns shares of PepsiCo. Motley Fool newsletter services recommend The Coca-Cola Company and PepsiCo. 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.If you have questions about this post or the Fool’s blog network, click here for information.
