Experiencing times of volatility in the broader market can test every bit of patience for investors. Whether you're looking to create or build out a portfolio, a market decline can be a frustrating time, but also a time of opportunity.
Below are three company stocks that have withstood the recent broader market decline with year-to-date share prices increasing by an average of 0.5%. By comparison, the S&P 500 index return over that same period is a negative 18.2%. Each of these three dividend stocks can be had for under $100 per share, and that's not the only thing to get investors' attention.
Sysco (SYY -0.71%) is a global leader in providing food and non-food products to businesses and organizations that serve the public, including restaurants, hotels, colleges, and hospitals. You've likely seen one of its trucks transporting goods to one of 650,000 customer locations, from one of 343 distribution centers worldwide.
But what you don't see when you look inside those trucks is what investors have watched increase annually for 52 consecutive years -- dividends, giving Sysco elite status as a Dividend King. The current annual dividend pays investors $1.96 per share at a yield of 2.3%. Those dividends can go a long way toward providing the stability of passive income for a portfolio.
Like many of the companies that rely on Sysco's products, Sysco has faced the challenges of supply chain issues. But due to the company's ability to scale, and a cash surplus, it's turning challenges into opportunities.
In 2021, Sysco acquired Greco & Sons -- a distributor specializing in Italian cuisine -- in an effort to expand its specialty foods segment, adding 25,000 service locations. Sysco management expects that acquisition to contribute $1 billion in revenue for 2022 as the company continues to build on its market share, which increased from 16% to 17% in 2020.
Sysco believes the Greco acquisition, combined with the early success of a new service model, will have a lasting positive impact on the company's growth. The Sysco Your Way model emphasizes an enhanced level of service provided to customers in areas with a dense restaurant population. This can help in two ways. First, the company should benefit from optimizing operations in specific regions, leading to a potential higher margin. Second, it can lead to higher revenue from an enhanced offering.
Sysco's performance makes a strong case for the long haul as its year-to-date growth is exceeding the industry target of 1.2x that management says the company can maintain the full year. Its third-quarter (ended April 2) revenue came in strong at 43% growth year over year, and 15% above pre-pandemic 2019's Q3. The growth was driven by supply chain management, increased service offerings, and lowered restrictions due to the waning pandemic impacts. That led to the company to raise full-year 2022 earnings guidance by about 5%.
2. Hormel Foods
Hormel Foods (HRL -1.20%) is a leading global branded food company, which you may know for its name-brand chili, SPAM canned ham, or Dinty Moore beef stews. Investors are happy to see Hormel selling well across these brand lines in addition to the Planters snack platform, which has been a catalyst for the company's quarterly record $3 billion in total net sales, resulting in 24% sales growth year over year for the first quarter.
While top-line numbers are coming at a record pace, the bottom line is also benefiting. As inflation has gripped the broader market, Hormel has been able to keep products on shelves and pass increased pricing on to its customers. The company is also aggressively pursuing cost-cutting initiatives by integrating the Jennie-O Turkey Store business functions into the Hormel organization, which CEO Jim Snee said will result in $20 million to $30 million in annual cost synergies by 2023.
The stock has also performed well this year. Its price was climbing for much of 2022 until taking a hit this week along with most of the rest of the market. It's currently trading down about 3%. Its performance has been helped along by a solid bottom line and continuing dividend payouts as it has done every quarter since becoming public in 1928. This year marks the 56th consecutive year of dividend increases, placing it firmly among the Dividend Kings.
The annual dividend pays $1.04 per share at a yield of 2.13% which puts it in line with top competitor Tyson Foods but well below competitor General Mills' 3.1% yield. Hormel can help protect your wealth through its longevity and consistency.
3. Black Hills
This third company is at the opposite end of the industry spectrum from food distribution, offering investors a diversified option among dividend stalwarts. Black Hills (BKH -0.46%) is an electric and natural gas utility provider serving 1.3 million customers across eight states in portions of the Western and Midwestern United States.
Although its footprint reaches fewer than 20% of U.S. states, its status as a Dividend King leaves quite an impression on investors. The company raised its quarterly dividend by 5% in December, making it 51 consecutive years of raising its payout. The current annual dividend paid to investors is $2.38 per share, at a yield of 3.1%, which tops the average 2.5% yield for the sector.
This utility provider can also offer investors some stability amid higher inflation because consumers tend to limit spending on discretionary things while continuing to spend on necessities. The confidence from investors is visible in Black Hills' stock price, which has grown 4.5% year to date while the S&P 500 has declined 18%.
In Q1 the company saw record peak loads from its electric utility businesses across several states, and it is experiencing population growth in the regions it serves. This is being supported by the expansion of transmission lines, which will allow it to reach new customers. Black Hills has also requested and received rate reviews in order to make up for costs associated with winter storm Uri in February 2021. To date, it has received $106 million of a potential total of $546 million in recovered costs.
Revenue for the quarter came in at 18% growth on a year-over-year basis, allowing Black Hills to reaffirm its 2022 earnings guidance. Investors should enjoy the company's outlook that calls for 5% to 7% annual earnings growth through 2026, as well as 5% annual dividend growth for the same time period.