5 Dividend Stocks to Weather Any Storm
The chances of a default by Greece look more and more likely by the day. Though the country is 5,000 miles away, and its economy is relatively small -- reverberations could easily be felt on our shores. A cascading effect of troubles in Europe would likely spread, leading our economy to a standstill.
There's no telling how things will play out, and my fingers are crossed we'll avoid Greek default. But with so much uncertainty in the air, it's prudent to evaluate our portfolios and arm them with solid companies that do well in any type of market.
Today, I'm looking to our Rising Stars to guide us to safety. Specifically, I'm looking for dividend-paying, consumer staple companies our analysts like.
Such companies offer stuff people always need -- and therefore have stable revenue streams. The accompanying dividend payouts are icing on the cake.
Phillip Morris (NYS: PM)
This stock isn't for everyone. If owning a company that contributes to high cancer rates throughout the world makes you cringe, I certainly won't judge.
But the case for this company as an investment is strong.
Fool analyst Dan Dzombak made his case for Philip Morris back in late February: "Philip Morris is the most powerful tobacco company in the world, with seven of the world's top 15 brands, including top-seller Marlboro. The company has an estimated 27% market share in its world markets -- excluding China, where only government-owned China National Tobacco is allowed to operate, and the U.S., where the company's former parent, Altria (NYS: MO) , is dominant."
The stock -- and its current dividend yield of 4.9% -- has beaten the market by a whopping 17.2% (including reinvestment of dividends) since Dan first wrote about it, and it's still in his portfolio, meaning it's still a buy.
- Add Philip Morris International to My Watchlist.
PepsiCo (NYS: PEP)
Our Rising Star leader Alyce Lomax has built a winning portfolio by focusing on socially responsible companies. She surprised many by singling out Pepsi for her portfolio, but she had some pretty good reasons. Chief among them are the efforts of CEO Indra Nooyi to diversify Pepsi's workforce and turn its Frito-Lay brand into a more eco-friendly venture.
Alyce goes on to say: "Pepsi's also got plenty of international growth in the works, targeting areas like Russia and China. Nooyi recently told BusinessWeek magazine that emerging markets make great 'learning labs,' through which Pepsi can devise new products and services."
It doesn't hurt that the company also currently offers a dividend yield of 3.3% and that it is beating the market by more than 11% since Alyce recommended it.
- Add PepsiCo to My Watchlist.
Rex pointed out that you're getting more than just Coke's signature product when you buy shares: "Besides Coke products, the company also has such famous brands as Fanta, Sprite, Fresca, Powerade, Minute Maid, and Dasani. The business consists mostly of selling concentrates and syrups to independent bottlers (including Coca-Cola Enterprises (NYS: CCE) , which is nearly 50% owned by Coca-Cola), which then produce the finished beverages, package them up, and sell them to distributors."
The decision has worked out well for Rex: Including the company's current 2.8% dividend yield, his pick is beating the market by more than 9%. As it remains in his portfolio, it's still a good buy today!
- Add Coca-Cola to My Watchlist.
Clorox (NYS: CLX)
As long as kids play outside and dirty up their clothes, parents will be using Clorox's products to clean things up. This was -- in part -- what Jason Moser was thinking when he recommended the stock back in April.
Jason pinpointed three reasons Clorox deserves a spot in anyone's portfolio:
1. Dominance: 80% of its products hold either the No. 1 or No. 2 spot in their respective fields
2. Global reach: Currently, 20% of revenue comes from outside the United States. But with a presence on five continents, that will surely grow.
3. Dividends: Having paid a dividend for 38 consecutive years, the past nine of which have all seen raises in the payout -- which currently sits at 3.6% -- as well.
Jason's move has paid off nicely: Clorox is beating the market by 10% since Jason bought it!
- Add Clorox to My Watchlist.
SUPERVALU (NYS: SVU)
Both Jim Royal and Ilan Moscovitz have recommendedbuying shares of this discount retailer. If it sounds like this is an odd play for a quality consumer staple company, that's half the point.
Jim points out that the company -- and its line of stores including Albertsons, Jewel-Osco, Shaw's, and Save-A-Lot -- doesn't have the kind of market respect it deserves. Jim points to two big moves the company is making to reposition itself.
First, the Save-A-Lot chain is being expanded, with an even more enticing value proposition: "Prices can be up to 40% less than traditional grocery stores -- and even 13% to 17% less than discounters." Second, the company is developing its own private label, a move which has worked out very well for fellow grocers in the past.
Throw in there the fact that the company offers an eye-popping 5.3% dividend, and you've got a recipe for a great buy in your portfolio.
- Add SUPERVALU to My Watchlist.
The greatest consumer staple of them all
One more pick that our Rising Stars have identified as a great consumer staple happens to also have a special place in Fool co-founder Tom Gardner's heart.
He has selected the stock as one of his five "Core" stocks in his Stock Advisor service. Since selecting it in 2002, Tom's pick of this stock is whooping the market by 82 percentage points! If you'd like to find out what this stock is, I encourage you to read The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." Inside, you'll find out about not only Tom's staple pick, but also a high-growth stock that aims to be the e-tailer of the future. The report is yours today, absolutely free!
At the time this article was published Fool contributor Brian Stoffel owns shares of Coca-Cola. You can follow him on Twitter at @TMFStoffel. The Motley Fool owns shares of PepsiCo, Clorox, Philip Morris International, SUPERVALU, Coca-Cola, and Altria Group. Motley Fool newsletter services have recommended buying shares of Philip Morris International, Clorox, Coca-Cola, and PepsiCo. Motley Fool newsletter services have recommended creating a diagonal call position in PepsiCo. Motley Fool newsletter services have recommended buying calls in SUPERVALU. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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