In this article, we will take a look at some of the best beverage stocks that pay dividends.
Retail sales rebounded significantly in October as the economy remained stable and consumers overcame worries about a port strike and other challenges that had dampened sales in September, according to the CNBC/NRF Retail Monitor. NRF President and CEO Matthew Shay noted that consumer spending picked up again in October, supported by job growth and increased wages throughout the year. He observed that inflation remained largely confined to services, with prices for some retail goods even declining. Shay indicated that October’s sales performance had laid a solid foundation for the holiday shopping season to begin on a positive note. When we examine specific sectors, we see that grocery and beverage stores experienced a 0.87% increase on a seasonally adjusted month-over-month basis and a 3.76% rise year-over-year without seasonal adjustments.
The food and beverage industry faced significant challenges during the pandemic. While in-home consumption surged, out-of-home dining virtually ceased, leading to a substantial decline in business and severely impacting the sector. Since then, the industry has undergone numerous transformations and is now in a recovery phase. According to a Market Research report, the global food and beverages market is projected to grow at a compound annual growth rate (CAGR) of 5.9% between 2022 and 2027. The market’s growth is being driven by shifting consumer habits, out-of-town retail parks, and retail stores.
Also read: 7 Best Beverage Stocks that Pay Dividends
Coffee remains the most popular beverage among Americans. In 2023, spending on out-of-home cold coffee, such as iced coffee, cold brew, and frozen coffee drinks, reached $17.7 billion—more than double the $8.5 billion spent in 2016, according to the food service research firm Technomic. Additionally, the National Coffee Association (NCA) reported that coffee consumption outside the home has returned to pre-pandemic levels as people resume visiting coffee shops and workplaces. Over a third of consumers who drank coffee on a given day did so away from home, marking the highest rate since January 2020, as highlighted in the NCA’s National Coffee Data Trends report.
Consumer behavior plays a critical role in shaping any industry, and the beverage sector is no exception. This industry is adapting to evolving preferences, with more Americans seeking alternatives to alcohol. Beverage companies emphasizing the health benefits of their products are striving to tap into this trend. According to data insights firm NCSolutions, over 40% of Americans aim to reduce their alcohol consumption in 2024, an increase from 34% the previous year. Among Generation Z, this figure rises to 61%, compared to 40% in 2023 who expressed similar intentions.
Technology stocks have been the standout performers this year, with gains of nearly 29%. While food and beverage stocks haven’t seen exceptional growth, the Food & Beverage index, which represents companies across various sub-industries in the sector, has still delivered a modest year-to-date return of 7.5%. Over the past 12 months, the index has risen by approximately 14%. In view of this, we will take a look at some of the best beverage stocks to buy.
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Our Methodology:
To select the best beverage stocks, we scanned Insider Monkey’s database of 900 hedge funds as of Q3 2024 and picked companies that are primarily involved in the production and distribution of a wide variety of liquid refreshments, including soft drinks, alcoholic beverages, coffee, tea, bottled water, energy drinks, fruit juices, sports and nutritional drinks, and dairy-based beverages. From that list, we selected 10 companies that pay dividends to shareholders and ranked them in ascending order of the number of hedge funds having stakes in them as of Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
8. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 34
Archer-Daniels-Midland Company (NYSE:ADM) is an American food company that specializes in agricultural commodities and food ingredients that are used for alcoholic and non-alcoholic beverages. The stock has dropped by nearly 27% since the beginning of 2024, as various market factors have continued to impact the business throughout the year. Furthermore, its third-quarter earnings fell short of expectations.
Archer-Daniels-Midland Company (NYSE:ADM) reported revenue of $20 billion in the third quarter of 2024, down by over 8% from the same period last year. The revenue also beat market expectations by $1.57 billion. However, the company anticipates softer market conditions in the coming year but is implementing measures to enhance performance and create value. It also intensifies efforts on productivity and operational excellence while adhering to a disciplined capital allocation strategy.
Though Archer-Daniels-Midland Company (NYSE:ADM) fell short of investor expectations with its recent quarterly earnings, its dividend history remains highly reliable, making it appealing to income-focused investors. Year-to-date, the company reported an operating cash flow of over $2.4 billion, compared with $1.9 billion in the prior-year period. On November 8, it declared a quarterly dividend of $0.50 per share, which was in line with its previous dividend. Overall, the company has been growing its dividends for 51 consecutive years, which makes ADM one of the best beverage stocks on our list. The stock’s dividend yield on November 24 came in at 3.76%.
At the end of Q3 2024, 34 hedge funds tracked by Insider Monkey held stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 35 in the previous quarter. These stakes have a collective value of over $556.5 million. Among these hedge funds, AQR Capital Management owned the largest stake in the company.
7. McCormick & Company, Incorporated (NYSE:MKC)
Number of Hedge Fund Holders: 36
McCormick & Company, Incorporated (NYSE:MKC) is a Maryland-based food company that deals in flavoring products used in a wide variety of beverages. The company achieved a significant milestone this quarter by delivering positive total global volume growth, driven by improved trends across its segments, with expectations for this momentum to carry into the fourth quarter. The Consumer segment reported solid volume growth despite facing a more challenging macroeconomic environment in China. Meanwhile, the Flavor Solutions segment showed sequential volume improvement, highlighted by robust growth in Branded Foodservice. The stock has surged by over 11.5% since the start of 2024, coming through as one of the best beverage stocks.
In the third quarter of 2024, McCormick & Company, Incorporated (NYSE:MKC) reported revenue of $1.7 billion, which fell slightly by 0.3% from the same period last year. The revenue surpassed analysts’ estimates by $13.07 million. Its operating income for the quarter came in at $287 million, growing from $245 million in the prior-year period. The company’s cash position also remained strong as it generated over $463 million through Q3, compared with $660 million a year ago.
On November 20, McCormick & Company, Incorporated (NYSE:MKC) announced a 7% hike in its quarterly dividend to $0.45 per share. Through this increase, the company achieved its 39th consecutive annual dividend hike. The stock offers a dividend yield of 2.32%, as of November 24. Ave Maria mentioned MKC in its Q1 2024 investor letter. Here is what the firm has to say:
“McCormick & Company, Incorporated (NYSE:MKC) manufactures and distributes spices and other flavor products to the food industry. This seemingly mundane business achieves extraordinary returns on capital as the spices and seasoning category tends toward a single dominant supplier which can simplify the complex inventory requirements of its customers. Over the coming years, McCormick should benefit from increasing demand for diverse cuisines, the trend towards cooking from scratch, and the younger consumers’ preference for heat via its Cholula hot sauce products.”
The number of hedge funds tracked by Insider Monkey owning stakes in McCormick & Company, Incorporated (NYSE:MKC) grew to 36 in Q3 2024, from 29 in the previous quarter. The consolidated value of these stakes is over $1.07 billion.
6. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 38
The Kraft Heinz Company (NASDAQ:KHC) is an American food company, based in Illinois. The company specializes in a wide range of snacks and beverages. It struggled to attract investor interest following the merger of Kraft and Heinz nine years ago. In 2019, it unsettled shareholders by announcing a $15 billion writedown on its leading brands, a reduction in dividends, and an SEC investigation into its accounting practices. Shortly after these revelations, then-CEO Bernardo Hees resigned from his position. However, the company managed to resolve its challenges under new leadership and achieved stability in its topline growth. The stock is up by a modest 4% in the past five years.
In the third quarter of 2024, The Kraft Heinz Company (NASDAQ:KHC) reported revenue of $6.38 billion, which fell by 2.85% from the same period last year. The gross profit margin rose by 20 basis points, reaching 34.2%. The company remains committed to investing in marketing, research and development, and technology to deliver solutions that create value for consumers and drive future topline growth. These efforts are supported by its established ability to unlock efficiencies and generate robust cash flow consistently. In addition, the company is committed to expanding its renowned and emerging food and beverage brands worldwide.
The Kraft Heinz Company (NASDAQ:KHC) reported a strong cash position in the most recent quarter. The company’s operating cash flow year-to-date came in at $2.8 billion, up 6.7% from the same period last year. Its free cash flow amounted to $2 billion, which showed a 9.7% growth on a YoY basis. Moreover, the company also paid $1.5 billion to shareholders through dividends in the first nine months of the year. The Kraft Heinz Company (NASDAQ:KHC) currently offers a quarterly dividend of $0.40 per share for an impressive dividend yield of 5.03%, as of November 24.
As of the close of Q3 2024, 38 hedge funds in Insider Monkey’s database owned stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 43 in the previous quarter. These stakes are worth over $12 billion in total. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder, with stakes worth over $11.4 billion.
5. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 51
Mondelez International, Inc. (NASDAQ:MDLZ) ranks fifth on our list of the best beverage stocks that pay dividends. The American food, beverage, and confectionery company prides itself on having an extensive portfolio of recognizable brands. It continues to focus on accelerating its core business while strategically reshaping its portfolio. One example of this is its expanded partnership with Evirth, a leading cake and pastry manufacturer in China. In the past five years, the stock has surged by nearly 25%.
Mondelez International, Inc. (NASDAQ:MDLZ) reported revenue of $9.2 billion, which showed a 2% growth from the same period last year. The revenue also beat analysts’ estimates by $84.8 million. The management intends to maintain its strategic growth efforts, which include reinvesting in brands like Oreo, expanding distribution channels in the U.S., and pursuing mergers and acquisitions in Europe. Mondelez’s partnership with Lotus Biscoff is expected to boost chocolate sales in Europe while also expanding its biscuit business in India. These initiatives are promising for the company’s future, and if the momentum persists, investors can anticipate ongoing dividend increases.
Mondelez International, Inc. (NASDAQ:MDLZ) is a reliable dividend payer, producing robust cash flow that suggests potential for future dividend growth. In the first nine months of the year, the company generated $3.5 billion in operating cash flow and its free cash flow for the period came in at $2.5 billion. In addition, it returned nearly $3 billion to shareholders during this period in dividends and share repurchases. MDLZ is one of the best beverage stocks as the company has been rewarding shareholders with growing dividends for the past 10 consecutive years. It currently offers a quarterly dividend of $0.425 per share and has a dividend yield of 2.92%, as recorded on November 24.
Insider Monkey’s database of Q3 2024 indicated that 51 hedge funds owned stakes in Mondelez International, Inc. (NASDAQ:MDLZ), growing from 47 in the previous quarter. These stakes are valued at over $1.66 billion in total. With over 3.7 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
PepsiCo, Inc. (NASDAQ:PEP) is a New York-based food, snack, and beverage company. It is known for its consistent reliability, with decades of serving customers worldwide. The company’s stock price has surged by over 6,500% since its inception. Due to strong customer loyalty, PepsiCo can implement small price hikes without heavily impacting consumer spending. Over the years, population growth and gradual price increases have steadily driven revenue growth, rising from $70.3 billion in 2020 to $92 billion by 2023.
PepsiCo, Inc. (NASDAQ:PEP) reported strong earnings in the third quarter of 2024, with revenues amounting to over $23.3 billion. The company’s overall business remained resilient, despite weaker performance trends in North America, ongoing challenges from recalls at Quaker Foods North America, and disruptions caused by rising geopolitical tensions in certain international markets. Strong cost management contributed to profitability, while the company made gradual investments to enhance its competitiveness in the marketplace.
Due to these ongoing challenges, PepsiCo, Inc. (NASDAQ:PEP) expects a modest, low-single-digit increase in organic revenue, down from the previously expected growth of around 4%. The company intends to stay focused on its commitment to shareholders, projecting a return of $8.2 billion to investors through dividends and share repurchases in 2024.
PepsiCo, Inc. (NASDAQ:PEP), one of the best beverage stocks, currently pays a quarterly dividend of $1.355 per share. In April this year, the company achieved its 52nd consecutive annual dividend hike. The stock supports an attractive dividend yield of 3.35%, as of November 24.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 58 funds owned stakes in PepsiCo, Inc. (NASDAQ:PEP), compared with 65 in the previous quarter. The collective worth of these stakes is more than $4.44 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 60
McDonald’s Corporation (NYSE:MCD) is an American multinational fast-food chain that also specializes in a wide range of beverages and other drinks. The stock has been down by over 2% since the start of 2024. The company is currently managing an E. coli outbreak at its restaurants, with at least 90 people falling ill, including one death, likely caused by contaminated onions in its burgers. Despite this issue, the company could still be a strong long-term investment, as improving economic conditions may lead to increased demand and stronger sales in the future.
In the third quarter of 2024, McDonald’s Corporation (NYSE:MCD) reported revenue of $6.87 billion, which showed a 3% growth from the same period last year. Systemwide sales to loyalty members in around 50 loyalty markets totaled more than $28 billion for the past twelve months and nearly $8 billion for the most recent quarter. This indicates that the company is not in immediate danger and still has room to improve its performance. Carillon Tower Advisers highlighted the company’s performance in its Q3 2024 investor letter. Here is what the firm has to say:
“McDonald’s Corporation (NYSE:MCD) performed well as it met the expectations of investors looking for improvements in relative market share trends. The company’s introductions of menu items at premium- and medium-price tiers are picking up pace, allowing it to capture value more effectively.”
McDonald’s Corporation (NYSE:MCD) currently offers a quarterly dividend of $1.77 per share, having raised it by 6% on September 26. This marked the company’s 48th consecutive year of dividend growth, which makes it one of the best beverage stocks with dividends. The stock has a dividend yield of 2.44%, as of November 24.
McDonald’s Corporation (NYSE:MCD) was a part of 60 hedge fund portfolios at the end of Q3 2024, down from 67 a quarter earlier, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $2.3 billion.
2. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
Warren Buffett’s favorite, The Coca-Cola Company (NYSE:KO) ranks second on our list of the best beverage stocks that pay dividends. The American multinational beverage company is well-known to consumers, offering a diverse range of drink brands and maintaining a global presence. The company’s greatest competitive advantage is its strong brand, which creates an economic moat, helping it stand out from competitors in the industry. In addition to its long history of providing a consistent product, it has developed exceptional marketing expertise, ensuring the brand remains prominent and top-of-mind for consumers. The stock has delivered a nearly 7% return to shareholders since the start of 2024.
The Coca-Cola Company (NYSE:KO) generated nearly $12 billion in revenues in the third quarter of 2024, which beat analysts’ consensus by $290 million. The company’s cash performance was also strong as it generated $2.9 billion in operating cash flow during the quarter and its free cash flow came in at $1.6 billion. Its adjusted operating margin reached an impressive 30.7% in Q3, reflecting a highly profitable business model.
This consistent profitability has directly benefited shareholders, as The Coca-Cola Company (NYSE:KO) has increased its dividend for an astounding 62 consecutive years. It’s rare for investors to find companies with such an exceptional history of returning excess profits to shareholders. The company offers a quarterly dividend of $0.485 per share and has a dividend yield of 3.04%, as recorded on November 24.
At the end of the third quarter of 2024, 69 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), up from 68 in the previous quarter. These stakes are valued at nearly $35 billion in total. With 400 million shares, Warren Buffett’s Berkshire Hathaway owned the largest stake in the company.
1. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 76
Starbucks Corporation (NASDAQ:SBUX) is a multinational chain of coffeehouses that specializes in a wide range of coffee beverages. The stock had been underperforming until August when it unexpectedly surged following a surprise leadership change. In August, the company appointed Brian Niccol as its new CEO, and immediately after the announcement, Starbucks’ shares rose by over 20%. The stock is up by nearly 10% year-to-date.
In fiscal Q4 2024, Starbucks Corporation (NASDAQ:SBUX) reported revenue of $9.07 billion, down by 3.2% from the same period last year. Its operating cash flow for the quarter came in at over $6 billion. The company opened 722 net new stores in Q4, bringing its total store count to 40,199 by the end of the period, with 52% being company-operated and 48% licensed. ClearBridge Investments appreciated Starbucks Corporation (NASDAQ:SBUX) on its strong business model in its Q3 2024 investor letter. Here is what the firm said:
“Similarly, we took advantage of a business reset at Starbucks Corporation (NASDAQ:SBUX) in the third quarter to initiate a position in the global coffee retailer. A confluence of factors, including degraded store-level operations and long consumer wait times, consumer fatigue with high prices and weakening engagement among occasional Starbucks customers has led to declining U.S. same-store sales growth. While the path ahead will likely require reinvestment back into the business, there are many merits to Starbucks’ business including its strong brand name and category leading market position. In response to recent challenges, Starbucks has appointed change-agent CEO Brian Niccol, who we know from the Strategy’s ownership of Chipotle Mexican Grill during its turnaround. Niccol has a successful track record of investing in product innovation and fixing execution issues, which we believe are the primary challenges facing Starbucks today. Starbucks represents the kind of successful playbook we have executed on historically – focusing on high-quality businesses and brands while being disciplined around the entry point into investments with attractive risk-reward opportunities.”
On October 23, Starbucks Corporation (NASDAQ:SBUX) declared a 7% increase in its quarterly dividend to $0.61 per share. This was the company’s 14th consecutive year of dividend growth. Moreover, the company has been making regular dividend payments for the past 58 consecutive quarters. The stock’s dividend yield on November 24 came in at 2.38%.
Insider Monkey’s database of Q3 2024 showed that 76 hedge funds owned stakes in Starbucks Corporation (NASDAQ:SBUX), up from 70 in the preceding quarter. The collective value of these stakes is over $3.25 billion.
Overall, Starbucks Corporation (NASDAQ:SBUX) ranks first on our list. While we acknowledge the potential for SBUX to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SBUX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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