The 7 Best Consumer Staples Stocks Today - Sure Dividend

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The 7 Best Consumer Staples Stocks Today


Updated on October 8th, 2021 by Bob Ciura

Income investors looking for high-quality dividend growth stocks should take a closer look at consumer staples stocks.

Of all market sectors, consumer staples (along with industrials) hold the highest number of Dividend Aristocrats, a select group of 65 stocks in the S&P 500 Index, with 25+ consecutive years of dividend increases.

There are currently just 65 Dividend Aristocrats. You can download an Excel spreadsheet of all 65 (with metrics that matter) by clicking the link below:

 

Consumer staples are household essentials—products that people can’t (or won’t) do without, even when the economy enters a recession. Think food, beverages, tobacco, and household products.

These are typically stable businesses that sell products people consume on a daily basis, which gives these companies pricing power and the ability to withstand recessions. Each stock mentioned in this article is on our list of 350 consumer staples stocks that pay dividends to shareholders.

You can download an Excel spreadsheet of all 350 dividend-paying consumer staples stocks by clicking the link below:

 

The top 7 consumer stocks in this article have higher dividend yields than the S&P 500 Index average, sustainable dividends, and expected returns of at least 9% per year.

The rankings in this article are derived from our expected total return estimates for every consumer staples dividend stock found in the Sure Analysis Research Database.

We filtered the list by focusing on stocks with a Dividend Risk Score of ‘C’ or higher.

With that said, this article will discuss the top 7 consumer staples dividend stocks in our research database, ranked by expected annual returns over the next five years.

Table of Contents

You can instantly jump to any specific stock by clicking on the links below:

Consumer Staples Stock #7: Universal Corporation (UVV)

Universal Corporation is the world’s largest leaf tobacco exporter and importer. The company is the wholesale purchaser and processor of tobacco that operates between farms and the companies that manufacture cigarettes, pipe tobacco, and cigars. Universal Corporation was founded in 1886 and is headquartered in Richmond, Virginia. With 50 years of dividend increases, Universal Corporation is a Dividend King.

We expect annual returns of 7.4% per year, due to a combination of EPS growth (1.5%), dividends (6.4%), and a small decline from a contracting P/E multiple.

Click here to download our most recent Sure Analysis report on Universal (preview of page 1 of 3 shown below):

Consumer Staples Stock #6: Mondelez International (MDLZ))

Mondelez was formed in 1989 as a result of the merger between Philip Morris and General Foods Corp. The company has undergone a slew of mergers and spinoffs since that time, including its North American grocery business, which was called Kraft Foods. That unit is now part of Kraft Heinz (KHC) and the remainder of the business is what we know as Mondelez today.

The global food processor has more than $26 billion in annual revenue.

Source: Investor Presentation

Mondelez reported Q2 results on 07/27/2021 with a strong rebound in Latin America. For the quarter, net revenue climbed 12.4% yearoveryear, driven by organic revenue growth of 6.2%, favorable currency, and acquisitions.

Revenue increased 31% in Latin America, followed by 17.4% in Asia, Middle East & Africa, and 15.7% year-over-year growth in Europe. Emerging markets generated 16.5% sales growth last quarter. Adjusted earnings per share (“EPS”) rose 8.2% (and 1.6% on a constant currency basis) to $0.66 for the quarter.

We expect Mondelez to grow its EPS by 8% per year over the next five years. Shares are presently overvalued, meaning a declining P/E multiple is expected to slightly reduce annual returns. With a 2.3% dividend yield, total expected returns are estimated at 9.1% per year.

Click here to download our most recent Sure Analysis report on Mondelez International (preview of page 1 of 3 shown below):

Consumer Staples Stock #5: Unilever plc (UL)

Unilever is one of the largest consumer goods companies in the world, producing and marketing ~400 brands in nearly 200 countries. Wellknown brands include Ben & Jerry’s, Qtips, Suave, Vaseline, Axe, Dove, Hellmann’s, Knorr and many more. Its products are used by more than 2 billion people every day.

Source: Investor Presentation

In late July, Unilever reported (7/22/21) financial results for the second quarter of fiscal year 2021. The company grew its underlying sales 5.4% over last year’s quarter, with 4.0% volume growth and 1.3% price hikes.

We expect annual returns of 9.3% through 2026, due to 5% expected EPS growth, the ~3.5% dividend yield, and a small boost from a rising P/E multiple.

Click here to download our most recent Sure Analysis report on Unilever plc (preview of page 1 of 3 shown below):

Consumer Staples Stock #4: Keurig Dr. Pepper (KDP)

Keurig Dr. Pepper (KDP) is the result of a ~$20B merger between Dr. Pepper Snapple (DPS) and Keurig Green Mountain completed in mid2018. The new company started trading on July 10, 2018. KDP is now the third largest nonalcoholic beverage company in terms of revenue in the U.S. behind CocaCola (KO) and Pepsi (PEP).

The company has generated strong growth in the past several years.

Source: Investor Presentation

KDP reports four business segments: Coffee Systems, Packaged Beverages, Beverage Concentrates and Latin America Beverages. Major brands include Core, Dr. Pepper, Sunkist, Canada Dry, Bai, 7UP, Snapple, and Keurig. KDP had net sales of about $11.62B in fiscal 2020.

We expect annual returns of nearly 10% per year, due mostly to 10% expected EPS growth. We view the stock as overvalued, with the negative return from a declining P/E multiple essentially offsetting the current dividend yield.

Click here to download our most recent Sure Analysis report on Keurig Dr. Pepper (preview of page 1 of 3 shown below):

 

Consumer Staples Stock #3: Reckitt Benckiser (RBGLY)

Reckitt Benckiser Group plc is a British consumer goods company headquartered in London, UK. The company can trace its history back to 1814. However, the Reckitt Benckiser Group plc as we know it today was formed in 1999 when Reckitt & Colman plc and Benckiser N.V. RBGLY combined.

Today, the company operates in over 200 countries and employs more than 40,000 people. The company is organized into three business units: Health, Hygiene, and Nutrition. The health business unit comprises products such as Durex, Veet, and Nurofen. The hygiene business unit includes Finish and Air Wick products, and the nutrition business unit comprises Enfa and Nutramigen.

We expect annual returns just above 10% per year, due to 4% annual EPS growth, the 2.7% dividend yield, and a boost from a rising P/E multiple.

Click here to download our most recent Sure Analysis report on RBGLY (preview of page 1 of 3 shown below):

Consumer Staples Stock #2: Altria Group (MO)

Altria Group was founded by Philip Morris in 1847. Today, it is a consumer staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other nonsmokeable brands, including Skoal and Copenhagen.

The company is aggressively expanding its IQOS brand of heated tobacco products.

Source: Investor Presentation

Altria also has a 10% ownership stake in global beer giant Anheuser Busch Inbev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON).

Total returns are estimated at 10.4% per year, comprised of 2.2% expected annual EPS growth, the high dividend yield of 7.7%, and a small boost from a rising P/E multiple.

Click here to download our most recent Sure Analysis report on Altria Group (preview of page 1 of 3 shown below):

Consumer Staples Stock #1: British American Tobacco (BTI)

British American Tobacco is one of the world’s largest tobacco companies. British American Tobacco owns many tobacco brands, including Kool, Benson & Hedges, Dunhill, Kent, and Lucky Strike. The company also acquired the remaining 48% stake in Reynolds American Tobacco that it did not already own in July of 2017.

Although the company is incorporated in the United Kingdom and headquartered in London, American investors can purchase its stock through American Depository Receipts that trade on the New York Stock Exchange under the ticker BTI.

We expect annual returns above 13%, due to the 8%+ dividend yield, EPS growth of 3% per year, and a ~2% annual boost from a rising P/E multiple.

Click here to download our most recent Sure Analysis report on British American Tobacco (preview of page 1 of 3 shown below):

High Yield Stocks - BTI

Final Thoughts

Consumer staples have long been relied upon by investors for their recession-resistant business models, and steady dividends each year. Many consumer staples stocks have maintained long histories of dividend increases, and some have high dividend yields as well. These 7 consumer staples stocks are expected to generate strong total returns each year.

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