I prefer to make use of the term “frugal,” but in point of fact I’m just low cost. That is a core aspect of my life and my investment philosophy. I just do not like overpaying for anything. That is why, if I could buy only three stocks as 2024 involves an in depth, they’d be PepsiCo(NASDAQ: PEP), Hormel Foods(NYSE: HRL), and Hershey(NYSE: HSY). Here’s a fast take a look at all three of those attractive dividend stocks.
PepsiCo has increased its dividend annually for over five a long time, making it a Dividend King. That is a highly elite group of corporations that you simply don’t join without having a really strong business. The corporate’s dividend yield is currently around 3.4%, which is near the best levels seen over the past 40 years or so. In other words, it looks like a fallen angel, which implies it’s a very good company facing temporary challenges. I’m looking closely on the stock today.
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There are plenty of things to love here. For instance, PepsiCo is the No. 2 non-alcoholic beverage company on the earth after Coca-Cola. It is the No. 1 salty snack maker via its Frito-Lay brand. And it has a robust position in packaged foods with its Quaker Oats business. Its size, research and development abilities, and distribution reach make it a valued partner to retailers across the spectrum.
While the business could also be facing some near-term challenges (which have slowed growth), potentially including increased government regulation within the U.S. market, it seems highly likely that PepsiCo will adapt and thrive anew in the longer term (similar to it has prior to now). There’s probably no rush to leap aboard, but in case you don’t look as 2024 involves an end, you would possibly miss your opportunity to own this gem of a consumer staples company.
I’ve owned Hormel for quite a few years, and it’s not understanding well for me right away. But I’m not selling it, and if it weren’t already a full position inside my portfolio, I’d buy more of the stock. Like PepsiCo, Hormel is a Dividend King, and the dividend yield is currently near all-time highs at 3.8%. Dividend investors should find the stock very appealing because the 12 months winds down. But a stock doesn’t find itself with a historically high yield for no reason. There are problems.
The interesting thing is that every one of the issues are manageable when checked out individually. For instance, Hormel has been having trouble passing on rising costs to customers. It should eventually figure this out with small price hikes over time, or it’s going to cut costs.
Hormel has also been coping with a slow pandemic recovery in China, where it has a large business. This is not unique to Hormel, and over time customers will likely come back. Hormel recently bought Planters right because the nut segment of the snacking area of interest began to decelerate.
Hormel has a protracted history of successful innovation, which it’s already putting to work with Planters and seeing success. Yes, there are problems, but Hormel should have the option to cope with them. The difficulty that I think Wall Street has right away is that this iconic food maker is coping with an inventory of problems suddenly.
I’m completely happy to dividend reinvest, effectively buying more of the stock every quarter, while I wait for Hormel to muddle through the headwinds it faces. Again, there’s probably no rush, but in case you don’t at the very least start looking now, you would possibly miss the long-term opportunity offered by Hormel’s historically high yield.
I had watched Hershey for years, hoping that someday I’d have a likelihood to purchase it at an inexpensive price. That point was 2024, and there is still a possibility to get in in case you act quickly.
Although it isn’t a Dividend King, Hershey’s dividend has grown steadily over time (its annual streak is as much as 15 years). That said, the dividend growth has been really impressive, with the annualized rate over the past decade at 10% (with even higher dividend growth rates over the previous few years). The dividend yield right away is toward the high end of the stock’s historical yield range, at 3.2%.
I purchased a starter position after which quickly built up a full position after listening to management’s comments about cocoa prices. Cocoa, a key ingredient in chocolate, has undergone the roof due to a novel set of circumstances that go way beyond general inflation trends. That is going to be an issue for the corporate, however the cocoa market appears to be adjusting already.
In any case, Hershey’s growth is prone to come from salty snacks and non-chocolate confections, anyway, because it expands into recent categories. In case you don’t mind stepping in while others are scared — a contrarian approach to investing — Hershey looks as if a solid, low-risk turnaround candidate. As with Hormel, I’m happily letting my shares dividend reinvest.
PepsiCo, Hormel, and Hershey are all well-run businesses. The proof of that’s of their long histories of success and impressive dividend stats. Sure, each is coping with headwinds right away, but they’ve all been through tough times before and managed to survive just high quality. It’d take a couple of years, but don’t wait too long in case you like reliable dividend stocks. These corporations are on sale as 2024 involves an in depth, but they will not be on sale eternally.
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Reuben Gregg Brewer has positions in Hershey and Hormel Foods. The Motley Idiot has positions in and recommends Hershey. The Motley Idiot has a disclosure policy.