Stocks Paying High Dividends in Consumer Staples
Continuing on with our defensive high yield dividend plays, I thought it would be a good idea to take a look at those “boring” stocks that usually fair well in down economies. Consumer staples type dividend stocks are simply those products you use around the house on a daily basis and don’t realize it. For example, Johnson and Johnson falls into this category and you probably have one of their brands in the form of soap or shampoo sitting in the shower right now…or maybe that Kellogg’s morning cereal you eat every day for breakfast. Stocks paying high dividends in consumer staples are great plays because they tend to move along a steady pace no matter where the economy is going because we, as consumers, use their “common” products every day. For the most part, these are not the 10% high dividend yield you might hope for from another sector. As we scan through consumer staples stocks paying high dividends, we will be lucky to find many over 4%. But let’s use FINVIZ once again to find some good consumer staple stocks. If you missed the tutorial, its quick and easy to scan for stocks paying high dividends.
After plugging in some of the basic criteria, here is what the scanner came up with:
First, notice an important detail about the scan. I chose only use stocks paying high dividends within the consumer “goods” sector at a dividend yield of “Over 3%.” Normally, this is not considered a high paying dividend, however, since we are looking at this conservative sector, 3% is a nice yield. Further, notice two cigarette companies popped up. I’m going to ignore these for now because many people simply don’t believe in investing in cigarette companies. Personally, I like to view tobacco as its own sector, somewhat similar to fast food. Both could be considered consumer staples/goods and act very similar to companies such as Johnson and Johnson in down economies. Our scan came up with 5 good looking stocks paying high dividends in consumer staples (in alphabetical order):
1.) Flowers Foods (FLO) The dividend stock has bounced around a fair amount over the past 12 months, so that brings on some initial worry. Further, it is one of the weaker paying dividends at forward yield of 3.10% and its debt/equity ratio is stellar. However, the company has faired well during tough times and continues to pay out a nice dividend yield.
2.) General Mills (GIS) A very similar pick to FLO, General Mills will provide the same 3.10% forward yield along with a stock price that has been somewhat turbulent over the past 12 months. If you are a longer term investor, just because a stock bounces around doesn’t not mean its a bad dividend pick. Remember to take a look at 5 Easy Ways to Find Stocks Paying High Dividends for some reminders. GIS does have lots of cash coming in every quarter with quality revenue growth. Lastly, the debt/equity ratio is a bit high, but well within reason.
3.) Heinz (HNZ) Ahh yes, we almost all love ketchup. HNZ has a nice paying dividend yield at 3.80%. You are not going to find huge growth from this company but that is not a bad thing. The stock price tends to trade in a channel but it also continues to pump out the 3-4% yield dividend. People love their condiments and Heniz will defintely profit from this even in down economies.
4.) Kimberly Clark (KMB) Definitely one of the better stocks paying high dividends on the list, KMB provides assortment of not only household consumables, but those used in healthcare as well. Currently, the dividend stock price is near its 52 week high and although it has been up and down through the year, the overall trend is up, which is nice to see. Further, the company has lots of cash on hand and brings in lots of cash every quarter. KMB is a great longer term play for any dividend investor.
5.) Proctor and Gamble (PG) This is a giant company and I can almost guarantee you have at least 5 brands that are owned by PG sitting in your house right now. The dividend stock has a huge market cap and the stock price tends to stay within a fairly tight range. With a dividend yield at 3.20% and loads of cash on hand this is a great conservative dividend play. Further, the company’s dividend payout ratio currently sits at 50%, which is relatively low…another positive sign.
So there you have 5 stocks paying high dividends in the consumer staples sector. While the yields are not all that exciting, these dividend stocks do provide some stability during rough economies. Further, they can be a nice way to balance out a portfolio if you have taken on too much risk. Lastly, always remember to follow up with your own research. You can find loads of stocks paying high dividends simply by doing a bit of research.