Dividends tell a tale if you listen carefully. And one of the most essential stories that dividends can tell investors is constancy, as seen by extended histories of yearly dividend increases. And that’s exactly what you’ll find today in consumer staples companies like Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and Hormel Foods (NYSE: HRL) – all brands you’ll recognize from your local supermarket.
A diverse range of products
Procter & Gamble is the most diverse brand on this list, covering everything from deodorant to paper towels. These are items that individuals buy on a regular basis, with the company’s emphasis often being on the higher end of the categories it services. It has a long history of utilizing innovation to justify pricing that is higher than what its competitors can charge. Its immense scale, including a colossal $330 billion market capitalization, adds to its attractiveness as an investment. It has an excellent distribution network and the means to invest in and aggressively market its products (the aforementioned innovation generated by research and development).
With this backdrop, Procter & Gamble has increased its dividend for 66 consecutive years, earning it the Dividend King. Today’s yield is roughly 2.6%. While not an astounding sum in absolute terms, it is a whole percentage point more than the 1.6% offered by an S&P 500 index exchange-traded fund today. While some investors may be concerned about the impact of inflation on Procter & Gamble’s profit margins, history shows that the company will be able to pass on price increases over time.
If you’re seeking a company that can weather the inevitable economic ups and downs while rewarding you with consistent dividends, Procter & Gamble should be on your shortlist.
Water with a flavor
Coca-Cola has a more appealing yield of roughly 2.8%. And, despite the fact that nothing the corporation sells is truly necessary, consumers continue to purchase its popular drink brands. That is how Coca-Cola has been able to enhance its dividend every year for the past six decades. Of course, the fact that Coke is a household name in countries all over the world helps.
What’s most intriguing about Coca-Cola is how straightforward its business plan is. The company basically creates flavorings for water, frequently with a little carbonation. Its profit margins are, as one might imagine, quite high. To put it another way, Coca-gross Cola’s profit margin is ten percentage points higher than Procter & Gamble’s and forty percentage points better than Hormel’s (which is discussed below). This is not to say that the other two firms are bad investments, but it does speak to Coca-capacity Cola’s to withstand rising expenses. Simply put, it has the flexibility to tolerate short-term losses as it works to restructure and restore its profit margins through price increases and cost-cutting initiatives.
The stock isn’t cheap right now, but Coca-Cola is hard to match for a long-term investor seeking dividend consistency.
Low and high temperatures at the same time
Hormel Foods is the last name here. The yield here is the lowest on this list, at roughly 2.2%. Nonetheless, it is the most appealing alternative in terms of value because the yield level is around the top of the company’s historical yield range. Surprisingly, the dividend has grown at a quick pace, with an annualized growth rate of more than 10% over the last decade. Meanwhile, the overall annual rise streak spans more than five decades.
Hormel owns a number of well-known protein-focused food brands. Hormel, Spam, Skippy, and Planters, among many others, are certainly household names. It has shifted away from commodity products and into higher-margin offerings, expanding through acquisition, maintaining a strong focus on innovation, and expanding into overseas markets. It isn’t the most well-known consumer staples brand, but as this list shows, it makes up for it in other ways (reliable and rapid dividend growth).
If you’re searching for dividend growth and/or have a value tilt, Hormel is a great place to start.
There’s no need to be elaborate.
Investing is a difficult undertaking, but you may make it easier by concentrating your efforts. One strategy is to exclusively invest in firms that have demonstrated their commitment to shareholders by providing consistent and growing dividends. Another method is to just examine the items you use on a daily basis. Procter & Gamble, Coca-Cola, and Hormel are all fantastic dividend stocks that are just waiting to be discovered.
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