3 Dividend King Consumer Staples Stocks That Could Make You a Millionaire

It’s unlikely that a single stock will take your portfolio to millionaire status, at least not without taking a huge risk. A much better (and less risky) approach is to buy a collection of well-managed stocks. What better place to look than Dividend Kings, who have proven their ability to reward investors with dividend growth for five decades (or more).

At this point, you might want to look at the consumer product icons Coca cola (K.O 0.94%), PepsiCo (PEP 0.06%)and Hormel Foods (HRL 1.46%). There’s a different reason to like each of these three dividend kings.

1. Coca-Cola is a steady grower

Every company’s business waxes and wanes over time. But some seem to manage to grow steadily with a normal sine curve that reliably moves higher over time. Coca-Cola is one of those companies, and it’s a big reason why it’s been a long-term holding for Warren Buffett. Berkshire Hathaway for decades. The fact that the Coca-Cola name is one of the most well-known beverage brands in the world means you probably already know what it does.

Because it’s well known, Coca-Cola stock rarely goes on sale, and it’s not exactly cheap today. The stock’s price-to-sales and price-to-earnings ratios are both slightly above their five-year averages. The dividend yield of 2.7% is also below the five-year average. A large increase in prices over the last year or so is largely responsible for this. However, the company’s influence in the industry and its long history of growth make it a core investment choice.

In particular, Coca-Cola’s earnings growth has averaged 10% annualized over the past five years. It might not last, but it speaks to what the company can do when it’s hitting on all cylinders. If you don’t mind paying a fair price for a great company, Coca-Cola should be in your millionaire portfolio. And if the stock price falls, well, take the opportunity to increase your stake in this beverage giant.

2. PepsiCo has a more attractive price

PepsiCo is No. 2 behind Coca-Cola in beverages, but No. 1 in salty snacks (with its Frito-Lay brand). In addition to these two businesses, it also has a packaged foods division (Quaker Oats). It is a giant of the food industry with the kind of scale, distribution and marketing talent that makes it an essential partner for retailers around the world. He has proven his ability to consistently grow his business over the long term. Remember, like Coca-Cola and Hormel, PepsiCo is a dividend king.

Another key reason to add PepsiCo to your core portfolio mix is ​​that it is more reasonably priced today. The stock’s P/S ratio is below its five-year average, and its P/E ratio is practically at its five-year average. The stock’s 3% dividend yield, meanwhile, is above its five-year average. All in all, PepsiCo looks a bit cheap right now.

PepsiCo’s business is not growing as strongly as Coca-Cola’s right now. That said, over the past decade revenues have grown by 3% per year, with earnings growing by 4%. That’s pretty solid for a consumer staples company. And while PepsiCo’s earnings growth has been weaker than Coca-Cola’s lately, even big companies go through lean times. This is often a good time for long-term investors to get on board.

3. Hormel is in the doghouse

Hormel is a pure-play food manufacturer. It has shifted its portfolio in recent years to focus on branded food products, adding brands such as Wholly Guacamole, Planters and Columbus to its already strong list of iconic brands such as SPAM and namesake Hormel, among others. Innovation has long been Hormel’s strong suit, and it’s one of the many reasons it’s such a valuable partner to retailers.

That said, Hormel hasn’t been hitting it out of the park lately as it’s been stuck in a bit. The consumer staples company failed to pass on rising costs to consumers, was hampered by the impact of bird flu, struggled with a slow pandemic recovery in China and bought Planters even as the snacks’ nut segment. the category started to slow down. Any one of these issues could be eliminated, but all four at once concern Wall Street going forward. Still, it seems very likely that Dividend King Hormel will eventually screw up very well. But it may take some time.

This is an opportunity for investors who think in decades, not days. Hormel’s P/S and P/E ratios are both below their five-year averages. Its dividend yield of 3.5% is well above its five-year average. It’s the value play in this trio with upside potential as management slowly addresses the list of issues currently weighing down investors.

Slow and steady wins the race

If you look at the companies here, Coca-Cola, PepsiCo, and Hormel, and think that they’re not going to make you an overnight millionaire, well, you’re right. They won’t. They are reliable businesses that throw money at investors year after year, allowing shareholders to build wealth over time. They’re the kind of boring, fundamental stocks that underpin seven-figure portfolios all over Wall Street (note that Buffett has owned Coca-Cola for decades). Each one is slightly different. Each trades at a slightly different valuation. But all three are the types of stocks that will let you sleep well at night as you build generational wealth and a reliable income stream, especially if you put them all together in a diversified portfolio.