Making passive income can help put you on the road to financial freedom. The more income you can generate, the more independence you'll have. Once you taste the freedom passive income can provide, it makes you hungrier for more of it.
Investing in higher-yielding dividend stocks is one way to help satisfy your appetite for passive income. A great place to find high-quality, high-yielding dividend stocks is in the food and beverage industry. For example, Mondelez (MDLZ +0.83%), PepsiCo (PEP 0.24%), and Starbucks (SBUX +1.22%) all pay higher-yielding dividends that have grown steadily over the years. Because of that, they can supply you with lucrative and steadily rising passive income streams.
A sweet dividend
NASDAQ: MDLZ
Key Data Points
Mondelez currently has a 2.9% dividend yield. That's more than double the dividend yield on the S&P 500 (1.4%).
Mondelez owns a portfolio of iconic brands, including Oreo, Cadbury, Ritz, Chips Ahoy!, and Clif, which generate billions of dollars in revenue and free cash flow each year to support its growing dividend. The global biscuit, chocolate, and snacking giant has grown its payout at a 10.5% compound annual rate over the past five years and has raised its dividend by 10% or more in nine of the past 10 years.
That dividend should continue rising in the future. Mondelez aims to organically grow its revenue by 3% to 5% per year, which should support high-single-digit earnings-per-share (EPS) growth. Meanwhile, the company has a strong balance sheet and generates lots of excess free cash flow, which allows it to make acquisitions to accelerate growth. Recent deals have included increasing its investment in Chinese cakes and pastries maker Evirth and strategically investing in U.K. doughnut start-up Urban Legend.
Quenching investors' thirst for income for decades
NASDAQ: PEP
Key Data Points
PepsiCo's dividend payout is a satisfying 4.1%. The global beverage and food giant has already unveiled that it will hike its dividend payment by another 5% starting in June. That extended its dividend growth streak to 53 straight years. Very few companies have reached the milestone of delivering 50 or more years of dividend growth, earning them the moniker Dividend Kings.
The company owns a large portfolio of global beverage and convenience food brands, many of which generate over $1 billion in annual sales. Notable PepsiCo brands include Pepsi-Cola, Lay's, Gatorade, and Quaker. Demand for these brands tends to be durable and steadily rising.
PepsiCo invests heavily in product innovation and productivity to drive organic sales growth and margin expansion. The company expects these investments to help support 4% to 6% annual organic revenue growth and high-single-digit EPS growth. Meanwhile, the company has a strong balance sheet, allowing it to make acquisitions as opportunities arise. For example, it recently agreed to buy better-for-you soda maker Poppi for nearly $1.7 billion.
A grand payout
NASDAQ: SBUX
Key Data Points
Starbucks currently has a 2.9% dividend yield. The global coffee giant has increased its dividend payment for 14 straight years, growing it at a 20% compound annual rate during that period.
While Starbucks already has more than 40,000 stores worldwide, the company has plenty of room to grow. The coffee chain sees the potential to double its U.S. store footprint in the future from its current level of more than 17,000 locations. Meanwhile, there's ample room to continue expanding overseas.
Starbucks also wants to improve the sales growth and profitability of its existing retail footprint. It wants to get back to its core focus on coffee and improve the customer experience to drive better results.
Helping satisfy your income cravings
People need to eat and drink, which enables food and beverage companies to produce steadily rising revenue and cash flow. That allows them to pay lucrative and growing dividends. Because of that, the sector is often ripe with opportunities for those seeking to satisfy their desire for more passive income. Companies like Mondelez, PepsiCo, and Starbucks pay enticing dividends that they've steadily increased, making them great stocks to buy for those with a hunger for collecting passive income.
