11 Best Consumer Cyclical Dividend Stocks to Buy Now

In this article, we will discuss 11 best consumer cyclical dividend stocks to buy now.

In the first half of 2022, consumer stock witnessed a loss of $1.8 trillion in market value due to high inflation and continuous interest rate hikes, as reported by Bloomberg. The S&P 500 Consumer Discretionary Index is also down 30.19% year-to-date. However, consumer spending grew by 0.6% in September despite inflationary pressures, according to the Commerce Department’s data. Luke Tilley, Chief Economist at Wilmington Trust, talked about ongoing consumer trends in his interview with Wall Street Journal this October. He said that consumer spending increased due to fiscal stimulus given during the pandemic. He also said that although the consumer backdrop seems to be slowing but is overall strong.

Following the current trends, analysts are expecting that consumer spending in the US will start rebounding in 2023. Goldman Sachs analyst Jason English spoke to CNBC about this. He asserted that increased consumer spending will be able to counter the negative growth in household discretionary cash flow. He further mentioned that this improvement in cash flow will be because of wages. This growth in consumer spending and the sector’s cash flow will also provide a positive direction to consumer cyclical stocks. In view of this, we will discuss some of the best consumer cyclical stocks that pay dividends. Some of the major names included in the list are Leggett & Platt, Incorporated (NYSE:LEG), The Home Depot, Inc. (NYSE:HD), and Starbucks Corporation (NASDAQ:SBUX).

Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/

Our Methodology:

For this list, we selected consumer cyclical dividend stocks from the housing, entertainment, retail, and automotive industries. We carefully studied the respective companies’ business models and also analyzed their financial health and dividend histories. The stocks are ranked according to their dividend yields, as recorded on November 1.

11 Best Consumer Cyclical Dividend Stocks to Buy Now

10. NIKE, Inc. (NYSE:NKE)

Dividend Yield as of November 1: 1.30%

NIKE, Inc. (NYSE:NKE) is an American multinational footwear manufacturing company that also specializes in the design and marketing of apparel and other accessories. The company has a 20-year run of consistent dividend growth, which places it as one of the best dividend stocks to buy. It currently pays a quarterly dividend of $0.305 per share for a dividend yield of 1.30%, as of November 1.

NIKE, Inc. (NYSE:NKE) remained committed to its shareholder return in its fiscal Q1 2023 earnings. The company returned $480 million in dividends to shareholders, up 11% from the prior-year quarter. It also repurchased shares worth over $1 billion during the Q1.

Raymond James initiated its coverage on NIKE, Inc. (NYSE:NKE) in October with an Outperform rating and a $99 price target. The firm sees the company as one of the most reliable stocks for long-term investment.

As of the close of Q2 2022, 72 hedge funds tracked by Insider Monkey had investments in NIKE, Inc. (NYSE:NKE), up from 67 in the previous quarter. These investments are collectively worth over $3.3 billion.

Leaven Partners mentioned NIKE, Inc. (NYSE:NKE) in its Q3 2022 investor letter. Here is what the firm has to say:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as NIKE (NYSE:NKE), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%^[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

9. The TJX Companies, Inc. (NYSE:TJX)

Dividend Yield as of November 1: 1.64%

The TJX Companies, Inc. (NYSE:TJX) is an American multinational department store corporation that sells off-price apparel. In October, Morgan Stanley raised its price target on the stock to $80 with an Overweight rating on the shares. The firm gave a positive outlook on off-price retailers post-pandemic.

In the second quarter of FY23, The TJX Companies, Inc. (NYSE:TJX) reported an operating cash flow of $641 million and ended the quarter with $3.5 billion of cash. The company returned $1 billion to shareholders, $346 million of which represented dividend payments.

The TJX Companies, Inc. (NYSE:TJX), one of the best dividend stocks on our list, offers a quarterly payout of $0.295 per share for a dividend yield of 1.64%, as of November 1.

At the end of Q2 2022, 49 hedge funds tracked by Insider Monkey owned stakes in The TJX Companies, Inc. (NYSE:TJX), compared with 55 in the previous quarter. The collective value of these stakes is over $1.55 billion.

8. Gentex Corporation (NASDAQ:GNTX)

Dividend Yield as of November 1: 1.81%

Gentex Corporation (NASDAQ:GNTX) is a Michigan-based electronics and tech company that manufactures equipment for the global automotive industry. The company had a ten-year dividend growth streak which was interrupted due to the pandemic in 2020. It currently pays a quarterly dividend of $0.12 per share and has a dividend yield of 1.81%.

In the third quarter of 2022, Gentex Corporation (NASDAQ:GNTX) reported an income from operations of $86.8 million, down from $88 million in the prior-year quarter. The company also repurchased 0.9 million of its shares for $22.3 million. Its revenue for the quarter saw a 23.5% year-over-year growth to $493.6 million.

In September, BofA maintained an Underperform rating on Gentex Corporation (NASDAQ:GNTX) with a $30 price target. The firm expressed concerns regarding auto volumes in 2023 considering the current market environment.

As of the end of June, 27 hedge funds tracked by Insider Monkey reported owning stakes in Gentex Corporation (NASDAQ:GNTX), up from 24 a quarter earlier. These stakes are collectively worth $495.3 million. With over 9 million shares, Ariel Investments was the company’s largest stakeholder in Q2.

7. Lowe’s Companies, Inc. (NYSE:LOW)

Dividend Yield as of November 1: 2.17%

Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that specializes in home improvement. During Q2 2022, the company generated $3 billion in operating cash flow and $2.7 billion in free cash flow. It returned $524 million to shareholders in dividends during the quarter, which takes its payout ratio to 27.08%.

Lowe’s Companies, Inc. (NYSE:LOW) is one of the best dividend stocks to buy as it has been making consecutive dividend payments since it went public in 1961 and also holds a 59-year track record of consistent dividend growth. The company currently pays a quarterly dividend of $1.05 per share and has a dividend yield of 2.17%, as of November 1.

Ahead of the company’s Q3 earnings, Citigroup maintained a Neutral rating on Lowe’s Companies, Inc. (NYSE:LOW) in October with a $215 price target. The firm appreciated the company’s strong fundamentals.

Lowe’s Companies, Inc. (NYSE:LOW) was a part of 53 hedge fund public portfolios in Q2 2022, compared with 65 in the previous quarter, according to Insider Monkey’s database. The stakes owned by hedge funds hold a combined value of roughly $5 billion. With over 10.2 million shares, Pershing Square was the company’s leading stakeholder in Q2.

Pershing Square Holdings mentioned Lowe’s Companies, Inc. (NYSE:LOW) in its Q2 2022 investor letter. Here is what the firm has to say:

“Lowe’s Companies, Inc. (NYSE:LOW)’s is a high-quality business with significant long-term earnings growth potential underpinned by a superb management team that is successfully executing a multi-faceted business transformation. (Click here to read the full text)

6. McDonald’s Corporation (NYSE:MCD)

Dividend Yield as of November 1: 2.23%

McDonald’s Corporation (NYSE:MCD) is another best dividend stock to buy on our list. The multinational fast-food chain was lauded by Street analysts due to its earnings beat in Q3. In October, both RBC Capital and Truist raised their price targets on the stock to $295 and $300, respectively.

On October 14, McDonald’s Corporation (NYSE:MCD) declared a 10% hike in its quarterly dividend to $1.52 per share, which marked the company’s 46th consecutive year of dividend growth. Moreover, it has raised its dividends at a CAGR of 7.98% in the past five years. As of November 1, the stock has a dividend yield of 2.23%. It can be a good addition to dividend portfolios alongside Leggett & Platt, Incorporated (NYSE:LEG), The Home Depot, Inc. (NYSE:HD), and Starbucks Corporation (NASDAQ:SBUX).

At the end of Q2 2022, 50 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation (NYSE:MCD), compared with 58 in the previous quarter. The consolidated value of these stakes is over $2.3 billion. Bridgewater Associates owned the largest position in the company in Q2.

5. Starbucks Corporation (NASDAQ:SBUX)

Dividend Yield as of November 1: 2.43%

Starbucks Corporation (NASDAQ:SBUX) is an American multinational coffeehouse company that has operations in over 80 countries around the world. In fiscal Q3 2022, the company reported an operating cash flow of roughly $1.3 billion, and its free cash flow came in at $841.3 million. Its revenue for the quarter saw an 8.7% growth from the same period last year at $8.1 billion.

On September 28, Starbucks Corporation (NASDAQ:SBUX) declared an 8.2% hike in its quarterly dividend to $0.53 per share. This was the company’s 12th consecutive year of dividend growth, which makes it one of the best dividend stocks to buy. As of November 1, the stock has a dividend yield of 2.43%.

In September, Piper Sandler raised its price target on Starbucks Corporation (NASDAQ:SBUX) to $92 with a Neutral rating on the shares, appreciating the company’s cultural reboot in the field and deeper understanding of their customers.

At the end of Q2 2022, 55 hedge funds tracked by Insider Monkey owned stakes in Starbucks Corporation (NASDAQ:SBUX), compared with 58 in the previous quarter. The collective value of these stakes is over $1.43 billion. Bridgewater Associates was one of the company’s leading stakeholders in Q2.

Polen Capital mentioned Starbucks Corporation (NASDAQ:SBUX) in its Q2 2022 investor letter. Here is what the firm has to say:

“Starbucks, which garners a lower weighting in the Portfolio, had slightly better than average three-month performance. Samestore sales were up double-digits in the U.S. and International exChina, with solid revenue growth across those regions. The company is experiencing cost pressures from wages and input costs though, and China same-store sales were down 23% due to zero-COVID policy restrictions and lockdowns.”

4. The Home Depot, Inc. (NYSE:HD)

Dividend Yield as of November 1: 2.58%

The Home Depot, Inc. (NYSE:HD) is a multinational home improvement retail company that sells various construction products and provides related services. Cowen presented a positive view of the company’s sales productivity and share growth. The firm initiated its coverage on the stock in October with an Outperform rating and a $350 price target.

The Home Depot, Inc. (NYSE:HD) is one of the best dividend stocks on our list as the company has been raising its dividends consistently for the past 12 years. The company currently pays a quarterly dividend of $1.90 per share for a dividend yield of 2.58%, as of November 1.

The number of hedge funds tracked by Insider Monkey owning stakes in The Home Depot, Inc. (NYSE:HD) grew to 80 in Q2 2022, from 75 in the preceding quarter. The collective value of these stakes is over $5.3 billion. Arrowstreet Capital was one of the company’s most prominent stakeholders in Q2.

Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q2 2022 investor letter. Here is what the firm had to say:

“The Home Depot, Inc. (NYSE:HD) is a high-quality operator in the home improvement industry. Macroeconomic concerns, particularly the rise in mortgage rates, caused the share price to pull back and trade at a greater discount to our estimate of intrinsic value. We believe Home Depot is well positioned to continue gaining share due to its premium real estate locations, strong operations and recent investments in its supply chain. We like Home Depot’s exposure to the professional customer and believe in its ability to take market share in this segment as we believe home improvement spending has the potential to remain resilient in upcoming years.”

3. Ford Motor Company (NYSE:F)

Dividend Yield as of November 1: 4.51%

Ford Motor Company (NYSE:F) is a Michigan-based multinational automobile manufacturer that specializes in commercial vehicles and other related automobiles. The company raised its dividends twice after the pandemic during which it ceased its payouts for nearly two quarters. Its quarterly dividend currently stands at $0.15 per share and has a dividend yield of 4.51%.

Ford Motor Company (NYSE:F) recently announced its third-quarter earnings and showed solid growth on various accounts. The company’s cash position remained strong as it reported $3.8 billion in operating cash flow and its adjusted free cash flow came in at $3.6 billion. Moreover, its revenue of $37.2 billion showed a 12% growth from the same period last year.

Morgan Stanley presented a positive stance on automobile companies and called them solid cash generators in the current environment. In view of this, the firm maintained an Overweight rating on Ford Motor Company (NYSE:F) in October, with a $14 price target.

At the end of the June quarter, 46 hedge funds in Insider Monkey’s database owned stakes in Ford Motor Company (NYSE:F), the same as in the previous quarter. The collective value of these stakes is over $608.7 million.

Leaven Partners mentioned Ford Motor Company (NYSE:F) in its third-quarter 2022 investor letter. Here’s what the firm said:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%^[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

2. Foot Locker, Inc. (NYSE:FL)

Dividend Yield as of November 1: 5.00%

Foot Locker, Inc. (NYSE:FL) is an American sportswear and footwear retailer company that has operations in over 28 countries worldwide. The company has raised its dividends at a CAGR of 3.65% in the past five years. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.00%.

In the second quarter of 2022, Foot Locker, Inc. (NYSE:FL) remained committed to its shareholder return. The company paid $38 million in dividends to shareholders and also repurchased 1.4 million of its stocks worth $40 million. Its revenue of $2.07 billion for the quarter came in line with Street estimates.

Ahead of the company’s Q3 results, JPMorgan maintained a Neutral rating on Foot Locker, Inc. (NYSE:FL) with a $37 price target.

The number of hedge funds tracked by Insider Monkey owning stakes in Foot Locker, Inc. (NYSE:FL) stood at 28 in Q2 2022, growing from 21 in the previous quarter. The stakes owned by these hedge funds have a consolidated value of nearly $230 million. Ken Griffin, Cliff Asness, and Israel Englander were some of the company’s major stakeholders in Q2.

Miller Value Partners mentioned Foot Locker, Inc. (NYSE:FL) in its Q1 2022 investor letter. Here is what the firm has to say:

“Finally, Foot Locker (NYSE:FL) came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”

1. Leggett & Platt, Incorporated (NYSE:LEG)

Dividend Yield as of November 1: 5.30%

Leggett & Platt, Incorporated (NYSE:LEG) is an American diversified manufacturing company that specializes in home and automobile-related products. In Q3 2022, the company’s operating cash flow grew by $15 million to $65 million from the same period last year. For FY22, it expects to pay $230 million in dividends to shareholders.

Leggett & Platt, Incorporated (NYSE:LEG) is one of the best dividend stocks on our list as it has raised its dividends for 51 years in a row. The company pays a quarterly dividend of $0.44 per share and has a dividend yield of 5.30%, as of November 1.

In October, Truist maintained its Hold rating on Leggett & Platt, Incorporated (NYSE:LEG) with a $35 price target, expecting a slowdown in the company’s sales in the upcoming quarters.

As of the close of Q2 2022, 12 hedge funds tracked by Insider Monkey owned stakes in Leggett & Platt, Incorporated (NYSE:LEG), compared with 15 in the preceding quarter. These stakes are collectively worth over $48.3 million. Millennium Management was the company’s leading stakeholder in Q2.

You can also take a look at 12 Best Bank Dividend Stocks to Buy Now and 11 Best Dividend Stocks Under $20

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Disclosure. None. 11 Best Consumer Cyclical Dividend Stocks to Buy Now is originally published on Insider Monkey.