Consumer goods stocks can be an excellent haven for investors looking for durable businesses that can endure the stock market's bumps and bruises. Consumer goods are essential to a household budget and make great dividend stocks.
For investors, that can mean passive income that's cash in your pocket. Better yet, some offer eye-popping yields that dwarf what a bank will give you with a savings account. Here are five shining examples to sink your teeth into for less than a thousand bucks.
1. Tobacco king and dividend royalty
Altria Group (MO 0.70%) is the largest tobacco company in the United States and the owner of the famous Marlboro brand of cigarettes. Most people know that smoking cigarettes has been a declining habit for decades, but the addictive nature of Altria's products gives it the pricing power to continue growing operating profit, which has increased by an average of 5.3% annually for the past 10 years.
MO Dividend data by YCharts.
Is Altria going to grow very fast? Probably not anytime soon. However, with a 7.9% dividend yield, it doesn't have to. Altria has raised its payout for 52 consecutive years, making it a Dividend King and a high-yield stock that investors can rely on as long as its dividend payout ratio doesn't stray too far above the 80% it hovers around.
2. Clean up your portfolio with passive income
Household products giant The Clorox Company (CLX 1.41%) is a textbook example of brand power. It built an empire on the Clorox brand of bleach, a simple chemical any company can make. Today, Clorox owns a range of brands you'll find in your home. The company's dividend has grown for the past 45 years and offers investors a 3.1% dividend yield.
CLX Dividend data by YCharts.
Clorox has struggled to digest high inflation over the past few quarters, which has made the company's dividend payout ratio soar. Investors should monitor Clorox's performance moving forward, but its debt is still manageable at three times earnings before interest, taxes, depreciation, and amortization (EBITDA), so it's probably too soon to worry about a dividend cut.
3. Dividends from peanut butter and jelly
The J.M. Smucker Company (SJM 0.20%) is another company you'll probably find throughout your home, but this time, in the kitchen. Most famous for its self-branded peanut butter and fruit spreads, the company also leaped into the pet foods business after buying Big Heart Pet Brands in 2015. Its 25 years of dividend growth make it a newly anointed Dividend Aristocrat.
SJM Dividend data by YCharts.
The company took on a lot of debt when it acquired its way into the pet business. Still, a modest dividend payout ratio enabled Smucker to keep giving shareholders raises over the years. The balance sheet has slowly improved over time, so the dividend is as safe as it's been in a while. That's good news for those looking to pocket the stock's 2.9% dividend yield.
4. Got a sneeze? Grab this stock
At its finest, paper products giant Kimberly Clark (KMB 5.51%) is another shining example of branding. The company managed to get America to associate facial tissue, arguably the blandest, most boring product imaginable, with Kleenex, the brand it sells. The company now makes everything from toilet paper to diapers and paper towels.
KMB Dividend data by YCharts.
Once again, people aren't going to cut these types of products from their households, and the company's reliability has translated to a dividend that's grown for 50 years. The payout ratio is slightly higher than one might like, and earnings-per-share (EPS) grows just a couple of percent each year. But a conservative investor could find value in the company's simple yet dependable business model with a 3.4% yield.
5. The Dividend King you've never heard of
You probably didn't know that the world's largest tobacco companies don't grow their tobacco! That job belongs to Universal Corporation (UVV 2.33%). The company produces and supplies tobacco to the largest tobacco companies on earth. Because Universal works behind the scenes, selling to cigarette companies, most don't realize it's a Dividend King with 51 consecutive dividend increases.
UVV Dividend data by YCharts.
Like many others in the tobacco industry, Universal has been an outstanding dividend stock. Investors can get a nearly 6% dividend yield, which management funds with an 88% dividend payout ratio. Univeral's struggled with growth, averaging just 1% annual revenue growth over the past five years. Investors probably shouldn't build a portfolio around Universal, but the stock can be a dependable high-yield investment for the short-medium term.
