Dividend-yielding stocks are a great way to boost your portfolio. Research shows that companies that grant dividends typically outperform their more "stingy" peers, so they have the potential to grow your portfolio with both earnings and regular dividend income. This week, I'm going to take a look at three retail and consumer products companies that offer not only future growth prospects, but strong dividends as well.
Books and coffee, anyone?
Even with a lackluster economy, folks are still going out for light reading and coffee on Saturday mornings. I pulled a Peter Lynch several weeks ago, and I have to say that my local Borders had a nice crowd of folks and friendly, helpful staff. I usually avoid buying music there because it's so much more expensive than Amazon.com
Yes, Borders and competitor Barnes & Noble
Happy hour at Diageo
Diageo's record speaks for itself: Its highly profitable product base has averaged a five-year profit margin of 22.4%, versus an industry average of 15.4%. The company's most recent earnings featured 8% annual sales growth and 7% EPS growth triggered by share buybacks. Competitor Constellation Brands
Sweet treats at the mall?
Looking for an unknown small cap with tons of potential? Rocky Mountain Chocolate Factory
Despite Rocky Mountain Chocolate's small size in terms of market cap, there's nothing tiny about the rewards it pays to investors. With a dividend yield of 4.4% and a 30% return on capital over the past 12 months, shareholders are getting one heck of a deal paying just under 12 times its trailing earnings.
With mall traffic declining, Rocky Mountain Chocolate Factory has seen its same-store sales slipping recently. And economic woes have left management closed-lipped concerning guidance. But Rocky Mountain is positioned to weather the bumpy retail market, and provide shareholders with a sweet dividend in the meantime.
Dividend delivery can be fickle, and maybe these companies will decide to drop their dividends if the sales or profit picture gets rough. For now, though, these three strong dividend-yielding companies are interesting retail and consumer products plays for long-term investment success.
Diageo and Borders are Motley Fool Income Investor selections. Amazon is a Stock Advisor pick. Looking for more advice in an all-consuming market? Give The Motley Fool's newsletters a try via 30-day free trials.
Fool contributor Colleen Paulson does not own positions in any of the stocks mentioned above and still likes to actually hold the book that she is reading. The Fool's disclosure policy is a diehard chocolate consumer.