Monday, October 1, 2018

Building Yield: 6 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 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 61 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 56 consecutive years. Yield: 3.4%

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 46 consecutive years. Yield: 3.5%

Flowers Foods, Inc. (FLO) is one of the largest producers and marketers of bakery products in the United States. The company has paid a cash dividend to shareholders every year since 2002 and has increased its dividend payments for 16 consecutive years. Yield: 3.7%

Meredith Corp. (MDP) publishes a suite of magazines and websites focused on food, parents and women (e.g. Better Homes and Gardens) and operates 17 local TV stations. The company has paid a cash dividend to shareholders every year since 1930 and has increased its dividend payments for 24 consecutive years. Yield: 4.1%

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 14 consecutive years. Yield: 4.4

Conclusion

The Consumer Goods is the third largest sector in my database of dividend stocks. Of the 224 stocks that I track, it currently is represented by 47 stocks (21%). 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 PG, KO, KMB, MDP.

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