Consumer goods are considered a highly dependable investment because of the stable demand for their products. The major risk that they face is of rising input costs, which they can pass onto the buyers without affecting their sales. However, a major pitfall with this sector is that many of the large companies have matured and offer little growth to the investors. In my research, I found five companies that are showing high growth prospects through acquisitions, diversification of product offerings and strong fundamentals. I have chosen five growing companies in the consumer goods sector that are good prospects for investors looking for a significant price appreciation and dividend yield. Here are the reasons why:
Flowers Foods (FLO)
The stock of FLO was trading around $2.5 in 2001 and since then, it has appreciated each year to go as high as $21 in 2008. Currently, the stock is trading around $19 per share. If we consider the 12-year period of 2001 till now, the capital gains on the stock have given investors a highly impressive compounded annualized return of nearly 18.2 % each year.
It is expected that the company is going to achieve a growth rate between 5-10% in 2012, and the dividend rate makes it an extremely attractive investment.
The company has been on a continuous journey of success and is regarded favorably by the investors. It paid out the promised dividend rate of $0.60 last year, which translates into a highly impressive yield of over 3%.
The company has a solid track record of making consistent dividend payments throughout its history. The dividend yield is over 3% now and if you combine this with the capital gains and the fact that the company is constantly growing, it is an extremely good investment. I believe that it is a definite BUY for both value investors and income investors.
Philip Morris International (PM)
Philip Morris International is a stock that you surely won't want to miss. It has a dividend yield of 3.8% and growing. Last year, it reported revenues of around $7.7 billion, beating expectations by more than $300 million.
The company said that they expect earnings per share between $5.25 and $5.35 in 2012. This was higher than the expectations of the investors who have consequently increased their expectation of $5.18 to $5.25. Furthermore, the analysts expect the EPS will further improve in 2013 and are expecting it to be in the range of $5.73 to $5.84.
The company boasts an attractive dividend yield of nearly 4%. Furthermore, they are expected to increase their revenues by 2% in 2012 and 5% in 2013. This makes it a highly attractive investment for everyone and I recommend that you buy in the range of $78 - $79 and accumulate shares as the price goes lower.
Phillip Morris is a firm favorite of investors but I will strongly warn you to avoid the mistake of overpaying for the stock. Remember, a price of $77 will give it a yield of 4% and this should be your focus point. You should definitely BUY the stock at the reasonable price.
Bunge is among the largest and oldest agricultural commodity operators in the world. The company has a market capitalization of nearly $10.1 billion and a forward dividend yield of 1.7%.
The stock of the company is trading at almost $66 per share and recently achieved a bullish climb crossing its moving average of 200-day, for the first time since July 2011.
It is expected that the stock price of Bunge will cross $73, in 2012. Furthermore, the company is expected to issue dividend of $1.00 over the year, which will make its dividend yield around 1.7%.
The company is growing by expansion and this is being viewed as a highly positive step for the company. They recently acquired Amrit Banaspati — another step in the direction of growth.
The company has a low beta of 0.66, meaning that the company doesn't experience much volatility due to the movement in the markets. It has a price to book ratio of around 0.8, which indicates that it is undervalued.
The one-year upside for the stock is expected to be 15%. The investors are confident that the strong finish to the previous year makes it a solid BUY for 2012. I think the price target of the share is very impressive and investors can reap benefit by accumulating the stock before it reaches its expected price target of $77.
PepsiCo is the producer and distributor of a vast variety of beverages and snacks. It features a huge portfolio of renowned brands and offers a great yield, which is better than most stocks and bonds.
The company boasts a strong history of revenues, profits and dividends growth. It has raised dividends each year since 2001. The dividends have grown from 14 cents per quarter to almost 52 cents each quarter. This is almost an increase of 300 percent.
The stock of the company is currently trading around $63 and the 52-week range of the stock is around $58 - $72. The EPS are expected to grow in 2012 and reach $4.5 per share. Furthermore, the dividend yield of the company is 3.1% with a dividend rate of almost $ 2.1 per share.
Coca-Cola Enterprises (CCE)
Coca-Cola Enterprises is a major producer, distributor, and marketer of a variety of non-alcoholic beverages, for the Coca-Cola Company.
The market capitalization of the company is nearly $8.6 billion. It employs 13,500 people and has revenues of around $0.8 billion and net income of nearly $750 million. The company intends to achieve considerable growth by increasing its distributions by around 23 percent.
In the previous fiscal year, the company realized return on equity of around 25% and had a dividend rate of $0.50. On February 7, 2012, they increased their quarterly dividend by a staggering 23% and paid $0.16 per share. This has made its dividend yield 2.3%.
This means that the company is growing stably and their dividend yield is increasing, making it an extremely attractive prospect for investors. A must BUY.
About the author:
Dividend KingI am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.
I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.