I spent last Thursday and Friday sitting at a rooftop pool bar with my mentor. He hates it when I call him that, but he hired me from a temp agency and taught me the business of financial newsletters. I hadn’t been in the same room with him for a decade. It was great to catch up and reminisce about our old letters. 

In 2011, we worked together on a newsletter that used a seven-point system to find the best dividend stocks. My favorite was always “a business that your mother would love or at least understand.”

This is an important concept for investors.

Speculators are chasing share price movements on a screen. They make a trade when they think that number is going to move one way or the other. Investors are buying a business because they see long-term value. For dividend investors, we want the opportunity to collect a solid that will hopefully rise for many years to come.

So, it makes sense to look for businesses that “your mother” or anyone not stock market savvy would be able to understand. This includes the “must have” in every dividend portfolio: consumer staples.

Cash Back from Your Favorite Brands

It’s entertaining to go with me to the grocery store. Some people check the expiration dates before they buy something… I’m looking for the parent company of the product to see if it pays a dividend.

For example, in the spice aisle, many of the seasonings are made by McCormick & Company (MKC), but quite a few are made by B&G Foods (BGS). These stocks yield 2.3% and 16.9%, respectively. The latter is struggling with its non-spice grocery lines right now.

Share

 

The J. M. Smucker Co. (SJM) is the parent company of products spread across the entire grocery store. This Dividend Aristocrat owns a lot of brands beyond just jams and jellies. Here’s a few of them:

• Coffee – Dunkin, Café Bustelo, Café Pilon, and Folgers

• Pet Snacks – Milk-Bone, Meow Mix, and Pupperoni

• Hostess Snack Cakes – Ding Dongs, Fruit Pies, and Twinkies

 Its current yield is 3.8%, and it has raised the dividend for 28 straight years.

Or maybe you like Hormel Foods Corp. (HRL) brands:

Source: Future Forward

Hormel is another Dividend Aristocrat and a Dividend King with 59 consecutive years of dividend increases. Its current dividend yield is 3.9%.

These are just a few ways you can collect some dividend “rebates” from your pantry items. Many other brand parents pay out steady and rising dividends in the consumer staples space.

Recently, two of my favorite independent brands were acquired by two dividend giants. So, I had to take a look at having them in my portfolio.

Two Giants Continue to Build Their Portfolios

As a shopper, I’m not always happy when “big-food” gobbles up my favorite brands. It means I have to keep an eye on the labels as ingredients and allergens are important to me. But as an investor, I’m always excited to earn a dividend.

1. Flowers Foods, Inc. (FLO)

Flowers Foods recently acquired Simply Mills, my favorite gluten-free cracker brand. It’s the parent company behind Dave’s Killer Bread, Nature’s Own, Wonder Bread, TastyKake, Canyon Bakehouse, and other brands. Located in Thomasville, GA, it’s one of the largest producers of packaged baked goods in the US. And the company is always looking to expand its offerings to consumers

In 2024, the company generated $5.1 billion in net sales and earnings per share of $1.17. FLO has paid a dividend for 87 quarters, and just announced another increase. The annual $0.92 dividend is a 5.2% yield at current prices.

2. PepsiCo, Inc. (PEP)

PepsiCo recently acquired Siete Foods, which makes my favorite taco seasoning and grain-free tortillas. This is just one of four acquisitions PEP has made since October 2024. The others were Obela, Sabra Dipping, and Poppi prebiotic soda.

These acquisitions all fit into the company’s already massive snack and beverage portfolio. Plus, you’ll find Pepsi in other grocery aisles with its Aunt Jemima, Life cereal, and Quaker Oats brands. In 2024, the company generated $91.8 billion in net revenue.

Earlier this month, PEP raised its quarterly dividend to $1.4225. It was PEP’s 53rd annual dividend increase and brings its current yield to 4.3%.

Of these companies, I have FLO and BGS in my personal portfolio. I think investing can be a bit more fun when you’re collecting dividends from brands that you love. So, next time you’re throwing an item into your grocery cart, check the label and see if you should also add its parent company to your portfolio.

Share

 

For more income, now and in the future,

Kelly Green

• B&G Foods BGS
• Consumer staples dividends
• dividend aristocrats
• Flowers Foods
• Inc. FLO
• Inc. PEP
• J. M. Smucker Co. SJM
• McCormick & Company MKC
• PepsiCo