13 Best Consumer Staples Dividend Stocks To Buy Now

Published on January 31, 2024 at 2:32 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 13 best consumer staples dividend stocks to buy now. You can skip our detailed analysis of the consumer staples sector, its performance, and outlook for 2024, and go directly to read 5 Best Consumer Staples Dividend Stocks To Buy Now.

In 2023, consumer staples companies experienced a decline in popularity as their revenue growth slowed down. Investors redirected their attention away from these companies and shifted towards mega-cap tech firms, which garnered greater interest and investment. The change in preference may be attributed to the perceived higher growth potential and innovation associated with the tech sector compared to the more stable but slower-growing consumer staples industry. The S&P 500 Consumer Staples Index found itself as the second weakest sector within the large-cap benchmark index. This particular index monitors companies within the S&P 500 classified under the GICS consumer staples sector. Throughout 2023, it experienced a decline of 2.4%, marking it as the second-worst performer, with only the utility sector exhibiting poorer results. Despite this setback, there is a more optimistic outlook for the consumer staples sector, suggesting that its future performance may not be as gloomy as indicated by its recent downturn.

Consumer staples companies specialize in producing or selling essential goods, such as toilet paper, bread, and toothpaste—items that people continue to purchase consistently, even in challenging economic circumstances or job loss. This consistent demand for essential products offers advantages for both consumer staples stocks and their investors. These benefits include reliable and predictable revenues, as well as resilience during economic downturns. When coupled with operational excellence, the top consumer staples stocks demonstrate a steady and gradual growth in earnings and cash flow over an extended period. Analysts are expressing optimism for the sector in 2024 due to these capabilities. Filippo Falorni, Vice President and Equity Research Analyst at Citi, shared with BNN Bloomberg his anticipation that consumer staple stocks, often regarded by investors as substitutes for bonds, will yield favorable returns throughout the current year. This expectation is rooted in the belief that these stocks will perform well amid a slowing U.S. economy. Here are some comments from the analyst:

“The consumer has been more resilient than expected … and as a result, sectors that are more offensive have performed better than staples, which tend to perform better when you have more concerns around the (macroeconomics). We’re starting to see a little bit of a slowdown in consumer spending … so I think staples, in general, can become more of a preferred sector as we head into particularly the second half of 2024.”

The onset of the pandemic has created new opportunities for the consumer staples sector, particularly with the surge in online shopping. The shift in consumer behavior towards digital platforms has become a notable avenue for growth within the sector. According to a recent report by Bloomberg Intelligence, digital commerce is projected to expand its share of total US retail sales significantly. Starting at 25% in 2022, the report forecasts that digital commerce will account for a third of all retail sales by the year 2027. This anticipated growth underscores the increasing prevalence and influence of online transactions in the retail landscape, highlighting a notable shift in consumer shopping habits over the coming years.

The digitalization of the consumer staples sector contributes to its defensive characteristics. While traditionally viewed as defensive due to the consistent demand for essential products, the integration of digital technologies adds an extra layer of resilience. The sector may not generate exceptionally high returns, but it also exhibits stability and is less prone to abrupt failures. Moreover, many of these stocks provide dividends, which can be viewed as a tangible return on investment even before substantial growth occurs. Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and PepsiCo, Inc. (NASDAQ:PEP) are some of the most prominent consumer staples stocks that pay regular dividends to shareholders. Given this, we will discuss the best consumer staples dividend stocks in this article.

13 Best Consumer Staples Dividend Stocks To Buy Now

A retail employee stocking shelves with consumer packaged goods/manufacturing products.

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 Q3 2023, 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. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

13. Kimberly-Clark Corporation (NYSE:KMB)

Number of Hedge Fund Holders: 31

Kimberly-Clark Corporation (NYSE:KMB) is a multinational consumer goods company. It produces a variety of well-known brands that include household names in personal care, tissue, and hygiene products. On January 24, the company declared a 3.4% hike in its quarterly dividend to $1.22 per share. This marked the company’s 52nd consecutive annual dividend increase, which makes KMB one of the best dividend stocks from the consumer staples sector. As of January 31, the stock has a dividend yield of 4.01%.

At the end of Q3 2023, 31 hedge funds in Insider Monkey’s database reported having stakes in Kimberly-Clark Corporation (NYSE:KMB), compared with 38 in the previous quarter. The collective value of these stakes is over $790 million.

12. The Clorox Company (NYSE:CLX)

Number of Hedge Fund Holders: 34

The Clorox Company (NYSE:CLX) is a consumer goods company that specializes in the manufacturing and marketing of a diverse range of products. The company is best known for its household cleaning and disinfecting products, but it operates across various segments. It is one of the best dividend stocks on our list as the company has been growing its dividends for the past 20 years. The company offers a quarterly dividend of $1.20 per share and has a dividend yield of 3.29%, as of January 31.

As of the close of Q3 2023, 34 hedge funds in Insider Monkey’s database owned stakes in The Clorox Company (NYSE:CLX), which remained unchanged from the previous quarter. These stakes are collectively valued at over $534.3 million. Among these hedge funds, D E Shaw was the company’s leading stakeholder in Q3.

11. Archer-Daniels-Midland Company (NYSE:ADM)

Number of Hedge Fund Holders: 37

Archer-Daniels-Midland Company (NYSE:ADM) is next on our list of the best dividend stocks from the consumer staples sector. The American global food processing and commodities trading company is involved in the processing of agricultural commodities, including oilseeds, corn, and wheat. Recently in January, the company achieved its 51st consecutive annual dividend growth and it currently pays a quarterly dividend of $0.50 per share. As of January 31, the stock has a dividend yield of 3.57%.

The number of hedge funds tracked by Insider Monkey owning stakes in Archer-Daniels-Midland Company (NYSE:ADM) grew to 37 in Q3 2023, from 32 in the previous quarter. These stakes have a total value of more than $769 million.

10. Sysco Corporation (NYSE:SYY)

Number of Hedge Fund Holders: 39

Sysco Corporation (NYSE:SYY) is a global leader in food service distribution. The company is primarily involved in the marketing and distribution of a wide range of food and related products to restaurants, healthcare, and educational facilities. The company offers a quarterly dividend of $0.50 per share, having raised it by 2% in April 2023. Its dividend growth streak currently spans over 54 years. With a dividend yield of 2.47% as of January 31, SYY is one of the best dividend stocks in the consumer staples industry.

Insider Monkey’s database of Q3 2023 indicated that 39 hedge funds owned stakes in Sysco Corporation (NYSE:SYY), which was the same as in the preceding quarter. The consolidated value of these stakes is over $797.3 million.

Fiduciary Management Inc. (FMI) mentioned Sysco Corporation (NYSE:SYY) in its Q3 2023 investor letter. Here is what the firm has to say:

“Sysco Corporation (NYSE:SYY) is the largest global distributor of food and related products to the foodservice or food-away-from-home industry. Sales in the U.S. account for approximately 82% of the company’s consolidated revenue, with the remainder mainly coming from Canada, Latin America, and Europe (18%). The company provides products and related services from thousands of suppliers to over 725,000 customer locations including restaurants (~62% of sales), education and government facilities (~8%), travel and leisure establishments (~8%), healthcare facilities (~7%), and other foodservice customers (15%). Sysco possesses many business characteristics that FMI finds attractive. The company has a dominant market position in a large, growing, resilient industry. They sell necessary, consumable products. Economies of scale allow Sysco to provide a better offering than peers while also allowing them to operate with higher margins. These advantages have helped Sysco take market share over time and earn a return on capital that consistently exceeds its cost of capital. We believe that Sysco will continue to grow its market share in the large and fragmented foodservice distribution market and should be able to generate mid-single-digit EBIT growth over time. When combined with share repurchases and dividend yield, the company should generate a high-single-digit to low-double-digit total return to investors without multiple expansion. The shares are trading at a depressed valuation relative to the S&P 500 and relative to the company’s history, which we believe provides us downside protection and could generate additional upside should it revert to the historical levels.”

9. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 40

Altria Group, Inc. (NYSE:MO) is an American multinational company that is primarily known for its involvement in the tobacco and related industries. The company’s quarterly dividend comes in at $0.54 per share and has a dividend yield of 9.69%, as of January 31. It is one of the best dividend stocks from the consumer staples sector as the company maintains a 54-year streak of consistent dividend growth.

According to Insider Monkey’s database, 40 hedge funds owned stakes in Altria Group, Inc. (NYSE:MO), compared with 43 in the preceding quarter. These stakes are worth over $565 million in total. With roughly 10 million shares, Harris Associates was the company’s leading stakeholder in Q3.

8. The Hershey Company (NYSE:HSY)

Number of Hedge Fund Holders: 42

The Hershey Company (NYSE:HSY) is an American multinational food and confectionery company. It has a global presence, with its products distributed and sold in various countries around the world. It is one of the best dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past 14 consecutive years. The company currently pays a quarterly dividend of $1.192 per share and has a dividend yield of 2.42%.

At the end of the third quarter of 2023, 42 hedge funds tracked by Insider Monkey reported having stakes in The Hershey Company (NYSE:HSY), compared with 43 in the previous quarter. The collective value of these stakes is roughly $760 million.

7. Mondelez International, Inc. (NASDAQ:MDLZ)

Number of Hedge Fund Holders: 51

With consecutive 10 years of dividend growth under its belt, Mondelez International, Inc. (NASDAQ:MDLZ) is next on our list of the best dividend stocks from the consumer staples sector. The multinational food and beverage company operates globally, with a presence in numerous countries. Its products are distributed and sold internationally, adapting to local tastes and preferences. It currently offers a per-share dividend of $0.425 every quarter and has a dividend yield of 2.23%, as of January 31.

As of the end of September 2023, 51 hedge funds owned stakes in Mondelez International, Inc. (NASDAQ:MDLZ), compared with 55 in the previous quarter, as per Insider Monkey’s database. The overall value of these stakes is over $1.33 billion.

6. Colgate-Palmolive Company (NYSE:CL)

Number of Hedge Fund Holders: 52

Colgate-Palmolive Company (NYSE:CL) is a multinational consumer goods company primarily focused on the production and distribution of personal care, home care, and oral care products. On January 11, the company declared a quarterly dividend of $0.48 per share, which was in line with its previous dividend. The company holds a 61-year track record of consistent dividend growth, which makes CL one of the best dividend stocks in the consumer staples sector. The stock’s dividend yield on January 31 came in at 2.28%.

Colgate-Palmolive Company (NYSE:CL) was a part of 52 hedge fund portfolios at the end of Q3 2023, according to Insider Monkey’s database. The collective value of stakes owned by these hedge funds is over $2.6 billion.

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