As an avid dividend investor, I love high-yield stocks. However, I've learned the hard way that reaching for yield can get you burned by dividend cuts. At this point in my life, I'm far more cautious, spending extra effort to understand the businesses I'm buying. The consumer staples sector is one of my favorite areas to invest in, and right now, you can find some great options, including recent purchases of mine: General Mills (GIS 3.10%), Hormel Foods (HRL 1.41%), and Clorox (CLX 3.06%).
Be careful in the consumer staples sector
The consumer staples sector is filled with reliable businesses that make necessity products. Think about it for a second. No matter how bad the economy or stock market gets, you are still going to buy food, deodorant, and toilet paper. This is why the sector is often viewed as a safe haven when times get tough.
Image source: Getty Images.
But not all companies are created equally. For example, Altria (MO +2.08%) has a high yield and the single-most important brand in its market. The only problem is that Altria is selling fewer and fewer Marlboro cigarettes each year, a fundamental business headwind that should scare most dividend investors. It is supporting its earnings and dividend via price hikes and share buybacks.
General Mills, Hormel, and Clorox
It isn't that General Mills, Hormel, and Clorox aren't facing their own problems. They are; that's why their yields are all historically high. However, their businesses are fundamentally stronger across the board.
GIS Dividend Yield data by YCharts
General Mills' 5.4% yield is supported by a food company focused on leading brands and innovation. It openly admits that fiscal 2026 is an investment year, but history suggests that it will make those investments and get back on track. Management just lowered its full-year earnings guidance, but I'm not particularly worried about the long term for a company that has paid a dividend without interruption for 127 years. I doubled my investment in late 2025.
I sold Hormel and Clorox at the end of 2025 to harvest some tax losses. In early 2026, I bought both back and added to my position in each. Hormel's yield is nearly 4.8% and it is a Dividend King, with over 50 years' worth of annual dividend increases behind it. Clorox's yield is 4%, and it is just a few years away from being a Dividend King.
NYSE: HRL
Key Data Points
Both companies are focused on owning leading brands and product innovation. Hormel is a food maker while Clorox is largely a products company, with some food businesses in the mix. Neither is hitting on all cylinders right now, but given their product portfolios and strong operating histories, I see the current price weakness as an opportunity for long-term investors like myself to buy great companies at attractive prices (and with historically high yields).
Time arbitrage is your secret weapon
Wall Street is painfully myopic, focusing too much on short-term factors. As a small investor, you can step back and think long-term by focusing on the fundamental aspects of the businesses you buy. When you do that, it becomes clear that General Mills, Hormel, and Clorox have proven time and again that they know how to survive basic industry headwinds while rewarding investors well for sticking around.
If you love dividends, the time for a deep dive is when other investors are worried about short-term industry fluctuations. That way, you get in with a high yield, and you can benefit from capital gains when the businesses recover, as they have many times before. It is your ability to take a long-term view that will help set you apart when lemming-like investors are all worried about what may or may not happen in the next few quarters.
