If Given the Opportunity to Purchase Only Three Consumer Staples Stocks Towards the End of 2024, My Choices Would Be:
I go by the term "thrifty," but in reality, I'm just penny-pinching. This is a fundamental aspect of my life and my investment approach. I dislike paying more than necessary for anything. If I could buy only three stocks as 2024 draws to a close, they'd be PepsiCo (PEP 1.12%), Hormel Foods (HRL 0.19%), and Hershey (HSY 2.24%). Here's a brief overview of these appealing dividend stocks:
PepsiCo, the new addition
PepsiCo has upped its dividend annually for more than five decades, landing it in an exclusive group known as Dividend Kings. This group is reserved for companies with exceptionally strong businesses. The current dividend yield is roughly 3.4%, reaching levels not seen in over 40 years. This suggests that it's a good company facing temporary setbacks. I'm keeping a close eye on the stock.
PepsiCo holds a plethora of appealing aspects. For instance, it's the world's second-largest non-alcoholic drink company, trailing only Coca-Cola. It's also the world's top salty snack manufacturer with its Frito-Lay brand. Furthermore, it holds a strong position in packaged foods, thanks to its Quaker Oats business. Its size, research and development capabilities, and extensive distribution network make it a valued partner for retailers across the board.
Despite some near-term challenges (which have slowed growth), PepsiCo is likely to overcome these hurdles and thrive in the future, just like it has in the past. There's no immediate need to hop on board, but if you wait until 2024 comes to an end, you might miss your chance to invest in this excellent consumer staples company.
Hormel, a long-time favorite
I've owned Hormel for years, but it hasn't been a profitable venture for me recently. However, I'm not selling it, and if it weren't already a full position in my portfolio, I'd buy more. Like PepsiCo, Hormel is a Dividend King, and its current dividend yield is nearing all-time highs at 3.8%. This high yield is appealing to dividend investors as the year comes to a close. But a yield this high doesn't come without its challenges.
Interestingly, Hormel is grappling with issues that can be managed separately. For instance, it's struggling to pass on rising costs to customers. This will eventually be resolved through small price increases over time or cost-cutting measures.
Hormel is also dealing with a slow recovery in China, where it has a substantial business. However, this isn't unique to Hormel, and customers will likely return over time. Hormel recently purchased Planters just as the nut segment of the snack market started to decline.
Hormel has a history of successful innovation, which it is already leveraging with Planters and seeing positive results. While there are problems, Hormel should be able to navigate them. The issue that Wall Street is currently grappling with is that Hormel is facing a list of challenges all at once.
I'm content to dividend reinvest, effectively purchasing more stock every quarter, while I wait for Hormel to navigate the challenges it faces. Again, there's no need to rush, but if you don't start looking soon, you might miss the long-term opportunity offered by Hormel's high historical yield.
Hershey, a new investment
I've watched Hershey for years, hoping for the chance to buy it at a reasonable price. That chance came in 2024, and there's still a window of opportunity if you act swiftly.
Although it's not a Dividend King, Hershey's dividend has steadily grown over time (its streak now stands at 15 years). Its annual growth rate over the past decade has been impressive, at 10%. The current dividend yield is at the high end of Hershey's historical yield range, at 3.2%.
I bought a starter position and then swiftly built up a full position after listening to management remarks about cocoa prices. Cocoa, a crucial ingredient in chocolate, has skyrocketed due to unique circumstances far beyond general inflation trends. This will be a challenge for the company, but the cocoa market appears to be correcting itself already.
In any case, Hershey's growth is likely to stem from salty snacks and non-chocolate confections, as it explores new categories. If you don't mind jumping in while others are hesitant, Hershey seems like a solid, low-risk turnaround opportunity. As with Hormel, I'm content to let my shares dividend reinvest.
These corporations, namely PepsiCo, Hormel, and Hershey, are exemplary in their operations. The evidence lies in their extended records of prosperity and noteworthy dividend numbers. Granted, they're currently grappling with some challenges, but they've demonstrated time and again their resilience in navigating adversity. While it might necessitate a couple of years, consider not delaying if you're inclined towards reliable dividend shares. As 2024 draws to a close, these companies are offering discounted prices. However, remember, sales may not last forever.
In light of my investment approach, I believe these challenges facing PepsiCo, Hormel, and Hershey present opportunities for smart investing with money. For instance, I'm keeping a close eye on PepsiCo's stock, hoping to invest in its strong business and high dividend yield. Also, I'm content to dividend reinvest in Hormel and Hershey, as they navigate their current challenges, to potentially benefit from their historical dividend growth and low-risk turnaround potential.
