Philip Morris International Inc. (PM), Lorillard Inc. (LO): Five Consumer Dividend Stocks With Sustainable Payouts

While Garmin Ltd. (NASDAQ:GRMN) qualifies for this list in terms of having a low payout ratio (of only about 50%), we’d still be wary that the GPS device manufacturer’s yield of 4.4% is in fact safe from future cuts. Smartphone apps, as well as in-car GPS, seem poised to decimate the company’s business although thus far the impact of this competition on sales and net income has in fact been limited. Still, Wall Street analysts are predicting further declines in earnings per share next year and so even with Garmin Ltd. (NASDAQ:GRMN)’s cash hoard we would be wary here.

It’s been a tough year for Darden Restaurants, Inc. (NYSE:DRI), as the company’s poorly timed expansion has resulted in roughly a 10% drop in earnings (sending the stock price down by a similar amount in the last year). Still, the dividend yield is quite high at 4.7% and that is with a fairly safe payout ratio even after an increase in the quarterly dividend from 50 to 55 cents earlier this year. At current prices the stock trades at 15 times trailing earnings. Millennium Management, run by billionaire Israel Englander, was buying Darden Restaurants, Inc. (NYSE:DRI) last quarter (check out Englander’s stock picks).

Rounding out our list of dividend prospects in the consumer sectors is $4.1 billion market cap furniture and furnishings company Leggett & Platt, Inc. (NYSE:LEG). The company has steadily increased dividends over the last 15 years, and currently features an annual yield of 4%. The payout ratio is not too high, and in addition Leggett & Platt, Inc. (NYSE:LEG) recorded modest growth in profits in the second quarter of 2013 versus a year earlier. The sell-side doesn’t expect any improvement in EPS in 2014 over the trailing numbers, but the company seems healthy enough to support the current dividend.

 Disclosure: I own no shares of any stocks mentioned in this article.