3 Dividend Stocks With Room to Run

It isn't just tiny stocks that are delivering exciting investment returns these days. PepsiCo (NYSE: PEP  ) , for example, surprised investors last week by turning in sizzling results.

The snack and beverage giant reported a 12% rise in profits on a 4% jump in revenue. Pepsi's food division was the star of the show, booking higher sales and expanded market share. After a healthy bounce on the earnings release Pepsi's stock is now up better than 20% this year -- or twice the market's return.

With that strong performance in mind, lets take a look at a few more dividend stocks that have the potential to trounce the market.

Home products
Procter & Gamble
(NYSE: PG  ) has been stuck playing defense for more than a year. After a rough period of underperformance, the company turned to cutting costs and has been clawing back the market share it had lost to rivals. But P&G is in the middle of an aggressive push for sales growth, with several new product launches, along with a big marketing campaign to back it all up. The company's stock yields 3% even after a 20% run so far in 2013. And it's valued at just 18 times earnings. Both of those stats beat smaller rival Clorox, which yields 2.9% and has a P/E ratio of 21.

Toys and games
Don't let Hasbro's (NASDAQ: HAS  ) 25% rise this year scare you off. Sure, the company turned in a mixed 2012. Sales growth was a big disappointment in the U.S. But profitability also jumped to 15% in that market, versus 12% the year before. Looking ahead, Hasbro is aiming to continue cutting down the vast number of products it sells so that it can focus on developing its blockbuster brands like Play-Doh and My Little Pony. Hasbro currently yields 3.6%, better than Mattel's 3.3%. The company also sports a P/E of 18, making it a relative deal compared to Mattel's 19.

Food and snacks
At a glance, Kraft Foods (NASDAQ: KRFT  ) looks like a spanking new company. Its stock just started trading in 2012, after all. But Kraft Foods' stellar portfolio -- including billion-dollar brands like Kraft and Oscar Mayer -- has taken decades to build. Fresh from its spin-off from Mondelez International, Kraft is a pure play on snacks and food in the North American market that has a lot of room to expand there. After a 10% run in the stock so far this year, Kraft is still cheaper than global competitor PepsiCo. And the company's 4% yield makes it one of the highest yielding stocks around.

Foolish bottom line
You don't have to venture into no-name stocks with questionable prospects to get a chance at real capital appreciation. Big, dividend-paying companies can make for exciting investments, too.

Kraft Foods Group is entering a new era after its recent corporate breakup. Its brand power is indisputable and its market share dominates, but Kraft's growth potential is limited and its heavily commoditized categories face massive pressures. In The Motley Fool's premium report on the company, we guide you through everything you need to know about Kraft, including the key opportunities and threats facing the company. To get started, simply click here now.


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