Consumers drive the economy.
As many economists like to point out, two-thirds of American gross domestic product comes from economic activity related to consumers. From everyday spending on groceries to discretionary expenses like a new TV, the success of the U.S. economy — and in many ways, the stock market — lies in whether consumers are confident and willing to spend. It’s worth noting that more than 65 percent of holiday shoppers told the National Retail Federation that they planned to keep on spending on themselves or others. If you’re looking for stability in 2019, consider these eight reliable income investments that capitalize on robust consumer sentiment and share their profits with shareholders through generous dividends.
Anheuser-Busch InBev (ticker: BUD)
Shares of BUD are down about 30 percent in the last two years as younger drinkers are turning to liquor and wine, or microbrews. Still, the biggest brewer in the world and this big-name stock has a strong baseline of sales of more than $50 billion a year. That supports a generous and reliable dividend for shareholders that has roughly tripled since 2011. Investors should keep in mind, however, that after the merger between the American icon Busch and Belgian brewer InBev, this is in now a European company and follows a different dividend schedule with only two annual payouts.
Current yield: 5 percent
Hasbro (HAS)
Toy powerhouse Hasbro is behind many brands kids love, including Tonka trucks and board games like Risk. But this is more than a play on toys of decades past. Hasbro has evolved to incorporate digital offerings and co-brand products with Disney and Marvel characters. The profit potential hasn’t been child’s play, either. In 2017, Hasbro sales topped rival Mattel (MAT) for the first time since 2000. And the stock has outperformed the S&P 500 with more than 60 percent gains since the start of 2014 compared to the S&P’s approximately 40 percent. Dividends have grown nicely along the way, too, to make its payouts above the S&P average.
Current yield: 3.1 percent
Alaska Air Group (ALK)
Alaska Air is a smaller regional airline with a market capitalization of under $8 billion — a quarter of the size of industry giant Delta Air Lines (DAL). Thanks to high-quality customer service and a focus on doing fewer routes well, ALK has been ranked the No. 1 airline in customer satisfaction by J.D. Power & Associates for a stunning 11 consecutive years. Growth has been slow and steady, but in a highly regulated industry with small margins that is still saying something. And on top of all this, ALK has become a serious dividend player since reinstating its dividend in 2013.
Current yield: 2.1 percent
Procter & Gamble Co. (PG)
Almost every income investor has considered Procter & Gamble at some point thanks to its incredibly stable business and its popular brands, which include Gillette, Pampers and Crest. While family budgets vary, you can be sure that these items will be on shopping lists. That long-term stability is great, but investors should also be encouraged by strength in PG stock over the last few months despite broader market volatility. Shares are up about 30 percent since their spring lows after activist investor Nelson Peltz pushed for changes to rejuvenate the business. That optimism coupled with dividends that span back to 1890 means this is a great foundational stock for any portfolio.
Current yield: 3.1 percent
Coty (COTY)
Coty is a good example of how a stock can succeed by dominating a narrow niche. That niche for Coty is beauty products — and in fact, its success led Procter & Gamble to throw in the towel on makeup and sell its Clairol and Covergirl lines to Coty in 2015. The result is a global powerhouse with these brands, plus others including Max Factor, Sassoon, OPI and licensed products under the Calvin Klein and Tiffany brands. Not only are these products staples for many households, the luxury lines offer nice margins to fuel a dividend payment that has increased from 20 cents annually in 2013 to 50 cents now.
Current yield: 7.8 percent
International Paper Co. (IP)
Think paper is dead in the age of digital? Think again. An American pulp and paper company based in Memphis, Tennessee, IP is the largest paper products company in the world with more than $23 billion in annual sales. Its biggest growth area is containerboard and other “brown stock” used in packaging. When you consider how many boxes online retailers use, the reason is clear. While IP is so big it has only seen modest growth lately, it is pretty close to a sure thing — as is its dividend, which was cut to just 2.5 cents quarterly after the financial crisis but has surged back to 50 cents quarterly.
Current yield: 5 percent
Harley-Davidson (HOG)
Harley-Davidson has admittedly taken some lumps, thanks in part to the White House’s trade war that has threatened international sales. As an iconic brand that is synonymous with motorcycles, it’s hard to imagine HOG going away anytime soon. Furthermore, the biggest part of Wall Street’s negativity has already been accounted for in this stock. Harley-Davidson should actually eke out a single-digit gain in revenue in fiscal 2018 when it finalizes numbers, and is projected to see sales flat if not slightly up again in 2019. Its dividend is incredibly sustainable at less than half of total earnings, so long-term dividend investors can have faith in this consumer stock.
Current yield: 4.3 percent
Altria Group (MO)
Now is an interesting time to reconsider tobacco giant Altria thanks to two interesting factors: the rise of vaping products, and the possibility of broad marijuana legalization. Admittedly, the future is a bit fuzzy on both fronts and the company still makes the vast majority of its cash from traditional tobacco products. However, that business remains strong as the company posts consistent revenue in the ballpark of $20 billion annually. And with a dividend payout that has almost doubled in the last five years, from 44 cents quarterly in 2013 to 80 cents at present, there is tremendous long-term income potential.
Current yield: 6.5 percent
Great consumer stocks to buy for income.
These eight dividend stocks market consumer staples and offer reliable income to their shareholders:
— Anheuser-Busch InBev (BUD)
— Hasbro (HAS)
— Alaska Air Group (ALK)
— Procter & Gamble Co. (PG)
— Coty (COTY)
— International Paper Co. (IP)
— Harley-Davidson (HOG)
— Altria Group (MO)
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8 Stable Consumer Income Stocks to Buy Now originally appeared on usnews.com
