Monday, September 14, 2015

Building Yield: 7 Consumer Goods Dividend Stocks

Demand for household and personal care products is generally stable and not affected by changes in the economy or other factors. There are certain things people will continue to purchase no matter how bad the economy gets. If you lose your job, you probably won’t stop bathing, washing your clothes, brushing your teeth or stop buying toilet paper. Given the relatively low price of most consumer goods, consumers often prefer to pay a few pennies more for a name brand that they are confident with.


Raw material costs is a primary driver of profitability, and the larger more established companies are in a better position to negotiate better terms. Growth comes from a growing population and expanding into emerging markets where the people are starting to earn a wage they can not only life on, but begin to buy things we consider necessities.

Consumer Goods Companies

Below are several leading Consumer Goods companies that I follow. The companies selected have a dividend yield in excess of 2.5% and have raised their dividends for at least 10 years:

The Clorox Company (CLX)is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products. The company has paid a cash dividend to shareholders every year since 1968 and has increased its dividend payments for 40 consecutive years. Yield: 2.8%

Kellogg Company (K) is a leading producer of ready-to-eat cereal also sells snack and convenience foods such as cookies, crackers, potato chips, cereal bars, fruit snacks and frozen waffles. The company has paid a cash dividend to shareholders every year since 1923 and has increased its dividend payments for 11 consecutive years. Yield: 3.0%

PepsiCo, Inc. (PEP) is a major international producer of branded beverage and snack food products. The company has paid a cash dividend to shareholders every year since 1952 and has increased its dividend payments for 43 consecutive years. Yield: 3.1%

General Mills, Inc. (GIS)is a major producer of packaged consumer food products company that produces cereal, yogurt and Betty Crocker desserts/baking mixes. The company has paid a cash dividend to shareholders every year since 1898 and has increased its dividend payments for 12 consecutive years. Yield: 3.1%

Kimberly Clark Corp. (KMB) is a global consumer products company producing tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Scott. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 43 consecutive years. Yield: 3.4%

The Coca-Cola Company (KO) is the world's largest soft drink company, and also has a sizable fruit juice business. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 53 consecutive years. Yield: 3.4%

The Procter & Gamble Company (PG) is a leading consumer products company that markets household and personal care products in more than 180 countries. The company has paid a cash dividend to shareholders every year since 1891 and has increased its dividend payments for 58 consecutive years. Yield: 3.9%

Conclusion

The Consumer Goods is the third largest sector in my database of dividend stocks. Of the 250 stocks that I track, it currently is represented by 30 stocks (15%). As noted above this is a very important sector for dividend growth investors. It it brings yield stability and potential growth to an income portfolio. Many income and value portfolios are over-weighted in Consumer Goods. Keep the soap and toilet paper coming!

Full Disclosure: Long PEP, KMB, KO, PG, in my Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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