We recently published a list of Top 10 High Dividend Yielding Consumer Defensive Stocks To Buy. In this article, we are going to take a look at where Conagra Brands, Inc. (NYSE:CAG) stands against other top high dividend yielding consumer defensive stocks to buy.
Consumer defensive stocks tend to perform well in uncertain times because they sell essential items such as household products, healthcare items, and food and beverages, among others. Such companies also tend to have a strong pricing power which helps them to easily pass on increasing costs to consumers.
The US market continues to struggle due to concerns over tariffs, geopolitical issues, and politics. In such times, consumer defensive stocks offer a way to protect one’s portfolio from this uncertainty.
When such shares also offer a high dividend yield, it performs a killer combination, loved by defensive investors looking to park their money for reliable passive income. We therefore decided to come up with a list of the top 10 high-dividend-yielding consumer defensive stocks.
To come up with the list of top 10 high-dividend consumer defensive stocks, we only considered stocks from the consumer defensive sector with a market cap of at least $10 billion and a dividend yield of at least 4%.
A worker assembling a meal in a food production facility.
Conagra Brands, Inc. (NYSE:CAG)
Conagra Brands, Inc. is a consumer packaged goods food company operating mainly in the US. It operates in Refrigerated & Frozen, food service, Grocery & Snacks, and International segments. The company offers an attractive dividend yield of 5.45%.
There is no denying the fact that the stock has considerable headwinds, which have elevated the dividend yield. Goldman Sachs downgraded the stock last month, bringing the target price to $26, the same level it currently trades at.
CAG recently reduced its FY25 guidance because of supply chain issues. Increasing competition in frozen foods from peers has dented the company’s ability to increase organic sales. To make matters worse, margins are expected to remain under pressure well into 2026 as per Goldman:
“We have observed further increases in several of its key commodities over the past couple of months, which could lead to incremental margin pressure in FY26.”
Unlike many other dividend income stocks, CAG’s yield hasn’t always been this high. Recent challenges have brought it to a level where investors with a slightly higher risk tolerance can invest in the stock. If the yield normalizes back to the 2.5% mark without any dent on the payout amount, there could be significant upside to the stock.
Overall, CAG ranks 5th on our list of top high dividend yielding consumer defensive stocks to buy. While we acknowledge the potential of CAG as a leading 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 as promising as CAG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
