04 Jun 3 US Consumer Stocks with Dividend Growth That Will Surprise You
Investors love receiving dividends.
This flow of passive income helps salaried workers to supplement their income, while also providing a constant stream of cash inflow for retirees.
REITs are popular among Singaporeans but it is by no means the only dividend-paying vehicle available.
Surprisingly, if you turn your attention to the US, there are numerous companies there that have a track record of raising their dividends over years, if not decades.
Some of these companies can be found in the consumer goods sector, providing us with essential products that we either use or consume in our daily lives.
Their dominance, stability and brand strength make them dependable investments that you can count on to hold their value, even through crises.
Here are three US consumer giants whose dividend growth may surprise you.
Campbell Soup Company (NYSE: CPB)
If you are like me, you will remember the familiar cans of Campbell’s mushroom soup that my mother used to buy when I was a young boy.
The company got its start in 1869, more than 150 years ago, as a fruit and vegetable seller.
Today, Campbell Soup is a food and beverage powerhouse with household brands such as Campbell’s, Pacific Foods and Prego.
The company also manufactures snacks such as biscuits and potato chips under the Pepperidge Farm and Kettle brands, respectively.
The pandemic has created elevated demand for the company’s products, leading to a respectable set of results for its fiscal 2021 half-year ended 31 January 2021 (1H2021).
Net sales rose 6% year on year to US$4.6 billion while operating profit jumped by 29% year on year to US$862 million.
Excluding earnings from discontinued operations, net profit would have surged by 63% year on year to US$554 million.
More importantly, Campbell Soup has been steadily increasing its quarterly dividend since 2002.
Back then, the company was paying out US$0.16 per quarter, but 19 years later, the quarterly dividend has more than doubled to US$0.37.
WD-40 Company (NASDAQ: WDFC)
When your door hinge starts to creak, you would reach for a trusty can of WD-40.
The company started in 1953 with just three staff whose mission was to create a line of rust-prevention solvents for the aerospace industry.
After 40 attempts to perfect the formula, they succeeded.
Trivia: WD-40 stands for “Water Displacement, 40th Formula”.
Today, the company manufactures a wide variety of maintenance and cleaning products, of which the former makes up nearly 90% of total sales.
The company distributes its products through a multitude of sales channels including hardware stores, farm supply outlets and home improvement stores.
WD-40 holds the lion’s share of the market for multi-use products in the US, and their products run the gamut from cheap to expensive depending on the end-user.
For the six months ended February 28, 2021, net sales rose 19% year on year to US$236.4 million.
Sales would have been even stronger if not for supply chain disruptions related to the pandemic that impacted the Americas region.
Operating profit climbed by 49.1% year on year to over US$49 million while net profit surged by close to 54% year on year to US$40.8 million.
WD-40 has been a superb dividend payer with over 40 years of uninterrupted dividend payments.
In its latest quarter, the company bumped up its quarterly dividend from US$0.67 to US$0.72.
This level of dividends is nearly triple of what it paid out in 2010 when quarterly dividend stood at just US$0.25.
Clorox (NYSE: CLX)
I would remember my mother warning me to be careful of the “Clorox” in the toilet when she was washing it.
It was only years later that I realised she was referring to bleach.
This example shows how the company’s brand name has been deeply ingrained into the minds of its consumers.
The company also manufactures a diverse range of cleaning products with brands such as Pine-Sol, Plumr and Fresh Step.
The pandemic has created a heightened awareness of the importance of cleanliness, leading to higher demand for Clorox’s products.
For the nine months ended 31 March 2021, the company’s sales climbed 16.9% year on year to US$5.5 billion.
Excluding an asset impairment of US$329 million, net profit would have surged by 49.8% year on year to US$942 million.
When it comes to dividends, Clorox has paid out a consistently higher dividend over the last 15 years.
The annual dividend stood at US$1.12 back in 2005 but has nearly quadrupled to US$4.34 in 2020.
We found a stock with 83% YOY growth and a 70% payout ratio. If we’re right, you can expect this stock to remain strong for the rest of 2021. All the details you need about this stock is inside our FREE report, 8 Singapore Stocks for Your Retirement Portfolio. Click here to download the report today.
Disclaimer: Royston Yang does not own shares in any of the companies mentioned.