8 Dividend Consumer Stocks to Buy for Income amp; GrowthMarch 26, 2020
Consumer stocks have been a mixed bag for investors in this bear market.
On the one hand, consumer staples, which provide life’s necessities, have held up far better than the broader market as Americans stock up for what could be weeks spent indoors. But consumer discretionary stocks – companies selling clothes, burgers and cars – have been every bit as bad as the S&P 500, if not worse.
But there are several consumer stocks to buy on both sides of the aisle now: staples that should continue to perform well as long as the outbreak keeps a grip on the country, as well as discretionary plays that have been knocked down into value status and have higher yields – and higher upside potential when the economy rebounds – as a result.
Here are eight large-cap consumer stocks to buy for income and growth. These companies boast varied mixes of dividend and upside potential. Some of them are bounce-back plays, while others are steady Eddies that investors can hold to protect against additional market declines. However, all of them have seen their dividend yields become at least a little richer over the past few weeks.
Home Depot (HD, $184.72) is down almost 24% since the bear market began, but it is outperforming the broader market by about 4 percentage points.
While homebuying (and the related DIY shopping that comes with it) is likely to take a hit in the short-term, some analysts believe that HD stock still could benefit from the stockpiling phenomenon that has overtaken some consumers who are worried about being without in a prolonged downturn.
“As the coronavirus crisis continues to unfold, the company is increasingly becoming a source of now more highly desired consumables,” Oppenheimer analyst Bran Nagel writes. Indeed, the store actually announced a reduction in store hours to restock shelves and clean.
There are other reasons to like Home Depot longer-term, however. HD is in the middle of a three-year, $11 million program to integrate its brick-and-mortar stores with its growing online business. That will be important as the company works to compete with Amazon.com (AMZN) and other online retailers for customers’ growing desire to shop from home.
“We’re excited about our e-commerce business as part of a whole interconnected retail strategy,” CEO Craig Menear told analysts when the company reported earnings in February. “We believe that the front door of our store is now in the customer’s post, it’s on the job site, that most of our customers’ shopping experience actually starts in the digital world even if it finishes in the physical world.”
As for the dividend, Home Depot in February raised the payout by a little more than 10% to $1.50 per share – its 11th consecutive dividend hike. And the recent decline puts HD among consumer stocks to buy if you’re looking for yields of 3% or more.
Market value: $314.2 billion
Dividend yield: 3.2%
Johnson & Johnson (JNJ, $119.18) is something of a hybrid play. It’s officially a health-care stock. But it…