In this article, we will take a look at some of the best dividend stocks in the consumer staples sector.
The consumer staples sector delivered a total return of 12.3% in 2024, a solid performance for a typically stable industry. However, without the substantial gains from two of its largest components, the sector’s overall returns would have been significantly lower. Known for its defensive nature, this sector appeals to risk-averse investors seeking steady income. While consumers might scale back on household essentials during economic downturns, the decline is generally less pronounced compared to discretionary spending on entertainment, travel, and similar categories. That said, many companies in this space are not expected to grow their earnings as rapidly as the broader market, which could result in underperformance during periods of strong market growth.
The consumer staples sector consists of companies that produce essential goods such as packaged foods, toothpaste, and dish detergent. The sector is home to many well-established companies that consistently pay dividends, further reinforcing its defensive nature. However, this defensive positioning remained a headwind rather than an advantage for most of 2024, following the sector’s decline in popularity in 2023. Investors largely steered away from defensive stocks, instead favoring a select group of mega-cap growth companies, particularly those linked to artificial intelligence. Moreover, persistently high interest rates put further pressure on dividend-paying stocks, as they are often seen as alternatives to bonds. Concerns over the potential impact of GLP-1 weight-loss drugs on food and beverage consumption also added to the sector’s challenges.
Amid a broader increase in short interest across equities, consumer staples stocks saw a rare shift in sentiment among short sellers during the summer months. According to the latest data from S&P Global Market Intelligence, short interest in the sector declined from 4.16% at the end of May to 3.87% by the end of August. Notably, the consumer staples was the only one among the 11 stock sectors to experience a drop in short interest over that three-month period.
Even so, the sector did not go unnoticed in 2024, as investors shifted their focus to it in August amid growing recession concerns and heightened market volatility. A report from Business Insider noted that the sector climbed approximately 4.1% that month, significantly outperforming the broader market, which saw a gain of just over 1% during the same period. Analysts at Bank of America observed that US consumers have been adjusting to a weaker labor market, dwindling pandemic-era savings, and elevated interest rates. This shift is evident in various ways, including the stronger performance of consumer staples stocks compared to their discretionary counterparts.
As 2025 approaches, analysts expect the consumer staples sector to regain stability amid a generally steady economic environment and a consumer landscape that, while under some pressure, is not facing severe strain. A report from Fidelity notes that overall consumer demand remains firm, household finances are in good shape, employment levels are strong, and real wage growth is holding steady. With the Federal Reserve starting to lower interest rates, the sector’s prospects appear favorable. In view of this, we will take a look at some of the best dividend stocks from the consumer staples sector.
A supermarket shelf overflowing with a variety of fast-moving consumer goods.
Our Methodology:
For this list, we identified dividend-paying stocks from the broader market’s 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 2024, 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.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 37
The J. M. Smucker Company (NYSE:SJM) is an American food company that manufactures a wide range of food and beverage products. Founded in 1897, the company has expanded into a $9 billion industry leader, backed by a broad portfolio of well-known brands, including Jif, Uncrustables, Milk-Bone, and Café Bustelo. Its products are found in over 90% of US households.
The J. M. Smucker Company (NYSE:SJM) has dropped more than 11% over the past year following the company’s decision to divest its packaged pastries brand, Cloverhill, along with its cinnamon roll segment as part of its efforts to reduce costs. The transaction is expected to be finalized by the end of the fourth quarter. That said, the company is still grabbing investors’ attention because of its strong dividend policy and continuous acquisitions.
The J. M. Smucker Company (NYSE:SJM)’s growth has been driven by strategic acquisitions, such as Big Heart Pet Brands in 2015 and Hostess in 2024, enabling the company to concentrate on high-growth segments like snacking, coffee, and pet food. Its 1998 purchase of Uncrustables for just $1 million has since evolved into a brand generating nearly $1 billion in annual revenue. This history underscores the company’s ability to transform modest investments into significant revenue streams.
The J. M. Smucker Company (NYSE:SJM) holds a strong dividend policy which is supported by its cash flow. In the most recent quarter, the company reported an operating cash flow of $404.2 million and its free cash flow came in at $317.2 million. It currently offers a quarterly dividend of $1.08 per share and has a dividend yield of 3.89%, as of February 24. It is one of the best dividend stocks on our list as the company has raised its payouts for 23 consecutive years.
9. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 43
The Kraft Heinz Company (NASDAQ:KHC) is an American multinational food company, headquartered in Illinois. It posted mixed results for Q4 2024, with lower sales being balanced by efforts to improve profitability. The company reported an adjusted EPS of $0.84, surpassing market expectations by $0.06, primarily due to unforeseen tax benefits and a reduced share count. However, revenue for the quarter came in at $6.58 billion, reflecting a 5% year-over-year decline and falling short of the projected $6.66 billion, as organic sales continued to weaken. The company saw its net sales in the US—its main revenue source—fall by 3.9% year-over-year, as higher prices provided only a slight offset to declining volumes.
That said, The Kraft Heinz Company (NASDAQ:KHC) demonstrated a strong cash position in FY24, with a free cash flow of $3.2 billion for 2024, marking a 6% increase from the previous year. Its operating cash flow of $4.2 billion also showed a 5.2% growth on a YoY basis. The company also distributed $2.7 billion to shareholders through dividends and share repurchases. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.11%, as of February 24.
The number of hedge funds tracked by Insider Monkey owning stakes in The Kraft Heinz Company (NASDAQ:KHC) grew to 43 in Q4 2024, from 39 in the previous quarter. The consolidated value of these stakes is nearly $11 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q4.
8. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Altria Group, Inc. (NYSE:MO) is a tobacco company that manufactures a wide range of related products including cigarettes and other nicotine products. In the fourth quarter of 2024, the company reported revenue of $5.11 billion, reflecting a 1.63% year-over-year increase and exceeding analyst estimates by $59.6 million. Strong brand performance drove income growth and improved margins in its core tobacco business, while the company continued investing strategically to support future expansion. For 2025, Altria expects adjusted diluted EPS to fall between $5.22 and $5.37, indicating a projected growth of 2% to 5% from its 2024 EPS of $5.12.
The tobacco industry has experienced significant changes in recent years. While global smoking rates have declined, there has been a noticeable shift toward smoke-free alternatives like e-cigarettes and oral tobacco, which are considered less harmful and are becoming increasingly popular. Altria Group, Inc. (NYSE:MO), known for brands such as Marlboro and Parliament, has been adapting to these trends by broadening its range of smoke-free products. In the past 12 months, MO has surged by over 35%.
Altria Group, Inc. (NYSE:MO) is a solid dividend payer, always remaining committed to its shareholder obligation. In FY24, the company returned $6.8 billion to investors in dividends. In addition, it has been rewarding shareholders with growing dividends for the past 55 years, which makes it one of the best dividend stocks on our list. The company offers a quarterly dividend of $1.02 per share and has a dividend yield of 7.41%, as of February 24.
7. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 49
General Mills, Inc. (NYSE:GIS) ranks seventh on our list of the best dividend stocks in the consumer staples sector. The Minnesota-based food processing company markets processed consumer food through retail stores. With a long history in the industry, the company has consistently met consumer needs, including during the COVID-19 pandemic. As dining restrictions led more people to cook at home, the company saw a surge in business activity. Its key North American retail segment performed strongly, driven by increased demand for organic products, meal solutions, and baking essentials.
General Mills, Inc. (NYSE:GIS) delivered solid earnings in fiscal Q2 2025, posting revenue of $5.24 billion, a 2% increase from the previous year and $97 million above analysts’ expectations. Operating profit rose to $1.1 billion, marking a 33% jump, driven by higher gross profit and the absence of a goodwill impairment charge that impacted the prior year’s results.
General Mills, Inc. (NYSE:GIS) currently offers a quarterly dividend of $0.60 per share and has a dividend yield of 3.92%, as of February 24. The company has a solid track record of dividend payments, supported by its consistent cash flow. In the first half of FY25, the company generated $1.8 billion in operating cash flow, reflecting a 19% increase from the previous year. Over this period, it distributed $676 million to shareholders through dividends. Notably, the company has maintained uninterrupted dividend payments for 125 consecutive years.
6. Kimberly-Clark Corporation (NYSE:KMB)
Number of Hedge Fund Holders: 50
Kimberly-Clark Corporation (NYSE:KMB) is a Texas-based multinational consumer goods and personal care company that offers related products and services to its consumers. The company enjoys strong brand recognition with well-known products such as Huggies, Pull-Ups, and Kleenex, which reinforce its global presence across both retail and professional markets. It is now prioritizing its core business segments, enhancing product innovation, and adapting quickly to evolving consumer demands. In the past 12 months, the stock has surged by over 15.6%.
In the fourth quarter of 2024, Kimberly-Clark Corporation (NYSE:KMB) posted revenue of $4.9 billion, surpassing analyst projections of $4.85 billion by 1.5%. However, its adjusted earnings per share (EPS) came in at $1.50, just below the expected $1.51. Despite challenges from foreign currency fluctuations and strategic divestitures, the company demonstrated revenue resilience, supported by a 2.3% rise in organic sales. Efforts to optimize pricing strategies and enhance its product mix also played a positive role.
Kimberly-Clark Corporation (NYSE:KMB)’s cash position also came in strong. In FY24, the company generated an operating cash flow of $3.2 billion. Moreover, it paid $2.6 billion to shareholders through dividends and share repurchases. On January 28, the company declared a 3.3% hike in its quarterly dividend to $1.26 per share. This marked the company’s 52nd consecutive year of dividend growth, which makes KMB one of the best dividend stocks on our list. As of February 24, the stock supports a dividend yield of 3.6%.
5. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 55
Mondelez International, Inc. (NASDAQ:MDLZ) ranks fifth on our list of the best consumer staples dividend stocks. The global food, confectionery, and beverage company has a workforce of around 80,000 employees worldwide. Its products, which include a diverse range of snacks, chocolates, biscuits, and beverages, are sold in more than 150 countries. The company strengthened its portfolio last year by acquiring a majority stake in Evirth, a leading player in China’s rapidly expanding frozen-to-chilled baked snacks market. This acquisition marked a significant step in the company’s strategy to drive growth in the cakes and pastries segment, which remains a key focus alongside chocolate and biscuits.
In the fourth quarter of 2024, Mondelez International, Inc. (NASDAQ:MDLZ) reported revenue of $9.6 billion, reflecting a 3.11% year-over-year increase but falling short of market expectations by over $51 million. For the full year, the company’s revenue rose 4.3% YoY, with growth across both developed and emerging markets. The chocolate segment expanded by 7.4% in 2024, while its leading global brands, Cadbury Dairy Milk and Milka, also saw strong performance.
Mondelez International, Inc. (NASDAQ:MDLZ) currently offers a quarterly dividend of $0.47 per share and has a dividend yield of 2.88%, as of February 24. The company reported a strong cash position in FY24 with its operating cash flow and free cash flow coming in at $4.9 billion and $3.5 billion, respectively. In addition, the company returned $4.7 billion to investors through dividends and share repurchases. It has been raising its payouts for 11 consecutive years.
4. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 56
Target Corporation (NYSE:TGT) is an American retail corporation that operates a chain of hypermarkets and discount department stores. In January, the company reaffirmed its focus on wellness by unveiling plans to launch over 2,000 new products across various categories, including more than 600 exclusive items. In addition, the company is expanding its men’s wellness selection with new offerings, such as Dr. Squatch body care, more products from Dwayne Johnson’s Papatui men’s care line, and a new men’s fragrance from the vegan brand Fin’ery.
Over the past year, Target Corporation (NYSE:TGT) has steadily increased its operating income while preserving a strong financial foundation. Although it carries a relatively high debt load, its cash, cash equivalents, and short-term investments are sufficient to meet short-term obligations. Growing cash reserves and an interest coverage ratio of 11.6 further reinforce its financial stability. Moreover, the company benefits from strong liquidity, supported by a clean balance sheet free of intangible assets and a robust return on invested capital (ROIC) of 11.5%.
Target Corporation (NYSE:TGT) has a strong track record of dividend payments and a solid financial standing. Over the first nine months of 2024, the company generated $4.07 billion in operating cash flow and ended the quarter with $3.4 billion in cash and cash equivalents. This financial stability allowed Target to distribute $516 million to shareholders through dividends. Notably, the company has upheld an impressive 53-year streak of continuous dividend growth, which makes it one of the best dividend stocks in the consumer staples sector. It offers a quarterly dividend of $1.12 per share and has a dividend yield of 3.56%, as of February 24.
3. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 62
Colgate-Palmolive Company (NYSE:CL) is a New York-based multinational consumer products company that is recognized for its products in Oral Care, Personal Care, Home Care, and Pet Nutrition. The company continues to enhance its operational efficiency while placing greater focus on sustainability and expanding its product offerings. Its goal of making all packaging recyclable by 2025 highlights its response to increasing environmental concerns from both consumers and regulators. In addition, by partnering on renewable energy projects, the company is adjusting its operations to align with shifting market trends and regulatory expectations. The stock has surged by nearly 5% in the past 12 months.
In its latest FY24 earnings report, Colgate-Palmolive Company (NYSE:CL) posted revenue of $20 billion for the first time, reflecting a 4% increase from the previous year. This marked the sixth consecutive year of organic sales growth within or surpassing its target range of 3% to 5%. Strong sales performance, along with operating leverage, drove a robust bottom-line result, with both net income and earnings per share achieving double-digit growth compared to 2023.
Colgate-Palmolive Company (NYSE:CL) currently pays a quarterly dividend of $0.50 per share and has a dividend yield of 2.22%, as of February 24. It is one of the best dividend stocks on our list as the company has raised its payouts for 62 years in a row. This dividend growth is supported by its solid cash position. In FY24, the company generated over $4 billion in operating cash flow, reflecting a 10% increase from 2023. Free cash flow exceeded $3.5 billion, up from $3 billion in the previous year. Maintaining its commitment to shareholders, the company returned $3.4 billion through dividends and share repurchases during the fiscal year.
2. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 69
PepsiCo, Inc. (NASDAQ:PEP) is a leading food and beverage company that produces a wide range of popular products. The company maintained steady earnings in FY24, reporting revenue of $91.8 billion, slightly up from $91.4 billion in the previous year. Operating profit rose to $12.8 billion, compared to $11.9 billion in FY23, while net income also increased to $9.6 billion. Looking ahead to 2025, the company anticipates low-single-digit growth in organic revenue and mid-single-digit growth in core constant currency EPS.
Despite being viewed as a defensive stock with slower growth, PepsiCo, Inc. (NASDAQ:PEP) has steadily increased its revenue and profit by prioritizing expansion and acquisitions. Its resilience, coupled with effective management of inflationary pressures, makes it a dependable investment during economic downturns. However, in 2024, the stock came under considerable pressure as investors favored higher-growth opportunities. Additional challenges arose from external factors, including deglobalization and concerns surrounding the adoption of GLP-1 drugs.
PepsiCo, Inc. (NASDAQ:PEP) declared a 5% hike in its annual dividend to $5.69 per share on February 3. Through this increase, the company stretched its dividend growth streak to 53 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 3.52%, as of February 24. In FY24, the company generated an operating cash flow of $12.5 billion. In FY25, the company expects to return approximately $7.6 billion to shareholders through dividends.
1. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 95
Costco Wholesale Corporation (NASDAQ:COST) is a Washington-based retail company. In fiscal Q1 2025, the company reported $62 billion in revenue, marking a 7.5% increase from the previous year. Net income rose to $1.8 billion, up from $1.6 billion in the prior year. The company ended the quarter with a strong cash position, holding nearly $11 billion in cash and cash equivalents, an increase from $9.9 billion in the previous quarter. It also generated $3.3 billion in operating cash flow.
In the past 12 months, Costco Wholesale Corporation (NASDAQ:COST) has surged by nearly 39%. This strong performance highlights its steady growth and resilience, even as other retailers grapple with rising costs. Analysts remain optimistic about its outlook, citing its track record of outperforming competitors by consistently expanding its market share and leveraging its retailing-as-a-service model, which ensures stable membership revenue. Costco’s competitive strength lies in its membership-based pricing and bulk discount strategy, which has helped build a loyal and expanding global customer base, as reflected in its latest quarterly performance.
Costco Wholesale Corporation (NASDAQ:COST), one of the best dividend stocks, currently offers a quarterly dividend of $1.16 per share and has a dividend yield of 0.45%, as of February 24. The company holds a 20-year streak of consistent dividend growth.
Overall Costco Wholesale Corporation (NASDAQ:COST) ranks first on our list of the best dividend growth stocks. While we acknowledge the potential for COST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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