In this article, we discuss 14 best consumer staple stocks to buy now.
The companies in the consumer staples sector produce and sell essential products that people need on a daily basis. People consume these products regularly, regardless of the state of the economy or their personal financial condition. Because of these defensive qualities, these companies are relatively stable investments as they tend to have steady demand for their products. Despite high inflation last year, the consumer staples sector delivered well and outperformed the wider market by a broad margin. The S&P Consumer Staples Select Sector index gained 0.37% through December 9, 2022, compared with a 16.17% drop in the S&P 500, according to Fidelity.
CNBC referred to data from the Commerce Department, which mentioned that advanced retail sales grew by 3% in January, versus estimates of 1.9%. Moreover, retail sales increased by 6.4% from the same period last year. The report also mentioned that consumer spending represents nearly two-thirds of the economic activity in the US, which means that consumers continue to spend despite elevated inflation.
Analysts are presenting a positive outlook on the consumer staples sector this year as well. Though the sector is not completely immune to economic challenges, these companies can perform better by reporting growing sales volumes. Moreover, the companies in the sector have consistent cash flows and strong balance sheets, which is important from a dividend point of view. Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and PepsiCo, Inc. (NASDAQ:PEP) are some of the well-known consumer staples stocks that pay regular dividends to shareholders. Given this, we will discuss the best consumer staples dividend stocks in this article.
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Our Methodology:
For this list, we identified dividend-paying stocks from the S&P 500 Consumer Staples Index with strong dividend growth track records. After that, we sorted these dividend stocks using Insider Monkey’s proprietary hedge fund sentiment data as of Q4 2022, which means that these stocks are the most popular dividend stocks among the elite hedge funds. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
14 Best Consumer Staples Dividend Stocks To Buy Now
14. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 30
Dividend Yield as of March 6: 3.74%
Kimberly-Clark Corporation (NYSE:KMB) is a Texas-based manufacturing company that specializes in personal care and paper-based consumer products. On January 25, the company declared a 1.7% hike in its quarterly dividend to $1.18 per share. This marked the company’s 51st consecutive year of dividend growth, which makes it one of the best consumer staples dividend stocks on our list. The stock’s dividend yield on March 6 came in at 3.74%.
In addition to Walmart Inc., The Procter & Gamble Company, and PepsiCo, Inc., Kimberly-Clark Corporation is a very good reliable option for income investors.
In January, UBS raised its price target on Kimberly-Clark Corporation to $136 with a Neutral rating on the shares, expecting the company to show gross margin recovery this year.
At the end of Q4 2022, 30 hedge funds tracked by Insider Monkey reported having stakes in Kimberly-Clark Corporation, with a total value of over $823.2 million. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q4.
13. The Clorox Company (NYSE:CLX)
Number of Hedge Fund Holders: 34
Dividend Yield as of March 6: 3.03%
The Clorox Company (NYSE:CLX) is a California-based manufacturing company that specializes in consumer and professional products. On February 15, the company declared a quarterly dividend of $1.18 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past 20 years and has paid dividends for over 50 years consecutively. The stock has a dividend yield of 3.03%, as of March 6. The company is among the best consumer staples dividend stocks on our list.
In fiscal Q2 2023, The Clorox Company reported revenue of $1.72 billion, which showed a 1.4% growth from the same period last year. Year-to-date, the company’s operating cash flow came in at $387 million, up from $222 million from the prior-year period.
The number of hedge funds tracked by Insider Monkey owning stakes in The Clorox Company grew to 34 in Q4 2022, from 27 in the previous quarter. The total value of these stakes is over $764.3 million. Among these hedge funds, Viking Global was the company’s leading stakeholder in Q4.
12. The Hershey Company (NYSE:HSY)
Number of Hedge Fund Holders: 37
Dividend Yield as of March 6: 1.74%
The Hershey Company (NYSE:HSY) is an American multinational company that specializes in the production of chocolate and other baked products. The company recently announced the completion of the purchase of one million shares of its common stock from Hershey Trust Company worth $240 million.
In February, Goldman Sachs raised its price target on The Hershey Company to $177 with a Buy rating on the shares, highlighting the company’s solid top and bottom-line beat.
The Hershey Company, one of the best consumer staples dividend stocks, currently pays a quarterly dividend of $1.036 per share. In 2022, the company extended its dividend growth streak to 13 years. The stock’s dividend yield on March 6 came in at 1.74%.
As of the close of Q4 2022, 37 hedge funds tracked by Insider Monkey reported owning stakes in The Hershey Company, compared with 42 in the previous quarter. These stakes have a total value of over $1.25 billion.
11. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 40
Dividend Yield as of March 6: 2.22%
Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based food processing company that has over 270 food processing plants across the globe. Stifel raised its price target on the stock to $116 with a Buy rating on the shares, appreciating the company’s recent quarterly earnings.
In the fourth quarter of 2022, Archer-Daniels-Midland Company posted revenue of $26.2 billion, up 13.6% from the same period last year. For FY22, the company’s operating cash flow came in at $5.3 billion. Moreover, it returned $2.3 billion to shareholders in dividends and share repurchases, which makes it one of the best consumer staples dividend stocks to buy.
On January 26, Archer-Daniels-Midland Company declared a quarterly dividend of $0.45 per share, raising it by 12.5%. Through this increase, the company achieved its Dividend King status as this was the company’s 50th consecutive year of dividend growth. The stock has a dividend yield of 2.22%, as of March 6.
At the end of Q4 2022, 40 hedge funds tracked by Insider Monkey reported owning stakes in Archer-Daniels-Midland Company, up from 37 in the previous quarter. These stakes have a consolidated value of $701.5 million.
Diamond Hill Capital mentioned Archer-Daniels-Midland Company in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
10. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 41
Dividend Yield as of March 6: 2.57%
Sysco Corporation (NYSE:SYY) is an American wholesale company that specializes in the distribution and marketing of a wide range of consumer and healthcare goods. The company currently pays a quarterly dividend of $0.49 per share and has a dividend yield of 2.57%, as of March 6. It has been raising its dividends consistently for the past 53 years, which places it as one of the best consumer staples dividend stocks to buy.
In fiscal Q2 2023, Sysco Corporation reported a 14% year-over-year growth in its revenue to $18.6 billion. During the first 26 weeks of fiscal 2023, the company returned $766 million to shareholders, including roughly $500 million in dividends.
In February, BMO Capital maintained an Outperform rating on Sysco Corporation with a $90 price target, appreciating the company’s guidance for FY23.
As per Insider Monkey’s Q4 2022 database, 41 hedge funds owned investments in Sysco Corporation, up from 40 a quarter earlier. The collective value of these investments is over $728.5 million. With over 1.5 million shares, D E Shaw was the company’s leading stakeholder.
9. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 45
Dividend Yield as of March 6: 8.08%
Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that produces related products. On March 1, the company declared a quarterly dividend of $0.94 per share, consistent with its previous dividend. The company is a Dividend King with 53 consecutive years of dividend growth. As of March 6, the stock has a dividend yield of 8.08%.
Altria Group, Inc. remained committed to its shareholder obligation in FY22, returning $6.6 billion to investors in dividends. The company’s strong dividend growth track record and solid dividend policy make it one of the best consumer staples dividend stocks.
At the end of Q4 2022, 45 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc., compared with 47 in the previous quarter. These stakes have a total value of over $1.8 billion. With over 12 million shares, GQG Partners was the company’s leading stakeholder.
8. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 46
Dividend Yield as of March 6: 2.34%
Mondelez International, Inc. (NASDAQ:MDLZ) is an American multinational confectionery, food, and beverage company that has operations in over 160 countries. Cowen raised its price target on the stock to $75 with an Outperform rating on the shares, presenting a positive outlook on the company’s performance this year.
Mondelez International, Inc., one of the best consumer staples dividend stocks, has been raising its payouts for the past nine years. The company offers a quarterly dividend of $0.385 per share and has a dividend yield of 2.34%, as of March 6.
In the fourth quarter of 2022, Mondelez International, Inc. reported revenue of $8.8 billion, which showed a 15.1% growth from the same period last year. In FY22, the company’s operating cash flow came in at $3.9 billion and its free cash flow for the year amounted to approximately $3 billion. It returned $4 billion to shareholders in dividends and share repurchases in 2022.
As per Insider Monkey’s Q4 2022 database, 46 hedge funds owned investments in Mondelez International, Inc., worth over $1.5 billion collectively.
Here’s what Coho Partners said about Mondelez International, Inc. in its Q3 2022 investor letter:
“Analysts’ bottom-up estimates for both 2022 and 2023 for the S&P 500 Index are beginning to decline. Coho is not immune to the earnings pressure exerted by a strong USD, although the portfolio on the whole has modestly less foreign revenue exposure relative to the S&P 500 Index. The two most impacted Coho stocks includes Mondelez International (NASDAQ:MDLZ), which gets about 75% of its revenues outside the U.S.”
7. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 47
Dividend Yield as of March 6: 5.12%
Philip Morris International Inc. (NYSE:PM) is a New York-based multinational tobacco company that sells its products in over 180 countries. In March, UBS upgraded the stock to Buy and also lifted its price target on the stock to $116. The firm expects an acceleration of ‘heated tobacco’ products in mature markets and also appreciated the company’s strong cash flow.
Philip Morris International Inc. maintains a 14-year streak of consistent dividend growth. The company offers a per-share dividend of $1.27 every quarter and has a dividend yield of 5.12%, as recorded on March 6. It is among the best consumer staples dividend stocks on our list.
In Q4 2022, Philip Morris International Inc. posted revenue of $8.15 billion, which showed a 0.8% growth from the same period last year. At the end of December 2022, the company had over $3.2 billion available in cash and cash equivalents and its total assets amounted to over $61.6 billion.
As of the close of Q4 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Philip Morris International Inc., with a total value of over $6.2 billion. Rajiv Jain and Terry Smith were some of the company’s major stakeholders in Q4.
6. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 58
Dividend Yield as of March 6: 3.10%
The Coca-Cola Company (NYSE:KO) showed strong earnings in its Q4 2022 report. The company’s revenue for the quarter came in at $10.1 billion, which showed a 6.3% growth from the same period last year. For FY22, the company’s operating cash flow stood at $11 billion and its free cash flow amounted to $9.5 billion. This cash generation was sufficient for its $7.6 billion worth of dividend payments throughout the year.
One of the best consumer staples dividend stocks, The Coca-Cola Company has been raising its dividends consistently for the past 61 years. The company offers a quarterly dividend of $0.46 per share for a dividend yield of 3.10%, as of March 6. Other popular dividend stocks in the sector include Walmart Inc., The Procter & Gamble Company, and PepsiCo, Inc..
Berkshire Hathaway was the largest stakeholder of The Coca-Cola Company in Q4 2022, owning 400 million shares in the company. Overall, 58 hedge funds in Insider Monkey’s database owned stakes in the company, worth $28.8 billion collectively.
Rowan Street Capital mentioned The Coca-Cola Company in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s take The Coca-Cola Company (NYSE:KO) for example. Its dividend yield is 2.8%, earnings are estimated to grow at only 3.6% rate per year over next 4 years, and its earnings multiple is currently at 24x (based on next years forecasted earnings). KO has an anemic growth, so we can argue that paying 24x earnings is not very attractive. Let’s assume that the multiple will stay constant over the next 3-5 years, thus our expected annual returns will be 2.8%+3.6% = 6.4% (that is below the current reported inflation rate and only slightly above the risk-free rate of 4%).”
5. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 61
Dividend Yield as of March 6: 2.54%
Colgate-Palmolive Company (NYSE:CL) is a New York-based multinational consumer goods company that manufactures and distributes healthcare, personal care, and other household products. In February, Citigroup initiated its coverage on the stock with a Buy rating and an $84 price target, presenting a positive stance on the household and consumer sector.
Colgate-Palmolive Company, one of the best consumer staples dividend stocks, currently pays a quarterly dividend of $0.47 per share for a dividend yield of 2.54%, as of March 6. The company has been raising its dividends consistently for the past 60 years.
In Q4 2022, Colgate-Palmolive Company generated over $4.6 billion in revenues, which showed a 5.2% growth from the same period last year. For FY22, the company’s operating cash flow came in at over $2.5 billion and its free cash flow amounted to $1.8 billion.
At the end of December 2022, Colgate-Palmolive Company was a part of 61 hedge fund portfolios, compared with 57 in the previous quarter, as per Insider Monkey’s data. The stakes owned by these hedge funds have a total value of over $4.46 billion.
Third Point mentioned Colgate-Palmolive Company in its recently-published Q4 2022 investor letter. Here is what the firm has to say:
“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.
Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.
We believe some of this “miss” was beyond the company’s control and that Colgate is on the road to delivering more predictable results. Organic growth remains strong and we expect it to start translating into earnings growth as execution improves, margins recover, and external pressures calm down…” (Click here to read the full text)
4. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 66
Dividend Yield as of March 6: 0.76%
Costco Wholesale Corporation (NASDAQ:COST) is an American company that operates big-box retail stores. The company is headquartered in Washington. In March Deutsche Bank raised its price target on the stock to $575 with a Buy rating on the shares after the company posted solid fiscal Q2 earnings.
At the end of February 2023, Costco Wholesale Corporation had roughly $13 billion available in cash and cash equivalents, up from $10.2 billion in the prior-year period. The company’s revenue for the quarter came in at $55.2 billion, which showed a 6.5% growth from the same period last year.
Costco Wholesale Corporation currently offers a quarterly dividend of $0.90 per share, with a dividend yield of 0.76%, as recorded on March 6. The company is one of the best consumer staples dividend stocks on our list as it has been raising its dividends consistently for the past 18 years.
According to Insider Monkey’s Q4 2022 database, 66 hedge funds owned stakes in Costco Wholesale Corporation, with a total value of $3.4 billion.
Madison Funds mentioned Costco Wholesale Corporation in its Q4 2022 investor letter. Here is what the firm has to say:
“Costco Wholesale Corporation (NASDAQ:COST) stock fell after November sales results showed a slowing consumer. The slower November sales were followed by a slight first quarter miss with lower-than-expected margins. Costco commented that they are not seeing trade-down but private label penetration has increased modestly. Traffic continues to be positive, and Costco remains well-positioned in a more challenging macro environment due to its strong value proposition.”
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 66
Dividend Yield as of March 6: 1.62%
An American retailer corporation, Walmart Inc. is next on our list of the best consumer staples dividend stocks to buy. In February 2023, the company became a Dividend King, raising its dividends consistently for the past 50 years. It currently offers a quarterly dividend of $0.57 per share for a dividend yield of 1.62%, as of March 6.
Walmart Inc. recently announced that it is planning to open 28 new healthcare centers in the US in 2024, which would double its current footprint. These new centers will offer services ranging from primary and behavioral health to telehealth and X-rays.
Deutsche Bank gave a positive stance on Walmart Inc.’s outlook for 2023. In view of this, the firm raised its price target on the stock in February to $169 with a Buy rating on the shares.
As of the close of Q4 2022, 66 hedge funds tracked by Insider Monkey reported owning stakes in Walmart Inc., down from 68 in the previous quarter. These stakes have a total value of over $4.8 billion.
Leaven Partners mentioned Walmart Inc. 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 Walmart (NYSE:WMT), 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. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 70
Dividend Yield as of March 6: 2.66%
PepsiCo, Inc. is an American multinational food, snack, and beverage company that specializes in the manufacturing and marketing of its products. In February, Barclays maintained an Overweight rating on the stock with a $187 price target, appreciating the company’s guidance for 2023.
PepsiCo, Inc. is one of the best consumer staples dividend stocks on our list as the company has been raising its dividends consistently for the past 50 years. It currently pays a quarterly dividend of $1.15 per share for a dividend yield of 2.66%, as of March 6.
As of the close of Q4 2022, 70 hedge funds in Insider Monkey’s database owned stakes in PepsiCo, Inc., worth over $4.4 billion collectively.
Lindsell Train mentioned PepsiCo, Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider, that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.
With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualised rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 74
Dividend Yield as of March 6: 2.60%
The Procter & Gamble Company, an Ohio-based multinational consumer goods company, tops our list of the best consumer staples dividend stocks on our list. The company maintains a 66-year streak of consistent dividend growth. It offers a quarterly dividend of $0.9133 per share and has a dividend yield of 2.60%, as of March 6.
At the end of December 2022, 74 elite funds tracked by Insider Monkey reported owning stakes in the company in Q4 2022, up from 69 in the previous quarter. These stakes are collectively valued at over $4.7 billion.
Rowan Street Capital mentioned The Procter & Gamble Company in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
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This article is originally published at Insider Monkey.
