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In this article, we will discuss 12 best food dividend stocks to buy now. You can skip our detailed analysis of the food industry and its outlook, and go directly to read 5 Best Food Dividend Stocks to Buy Now.
The food industry encompasses all businesses that are involved in the production, transportation, storage, and selling of food and related items. Like many other sectors, the food industry also evolved during the pandemic in 2020 when major companies brought digital operations into play. The execution worked splendidly for the overall industry as analysts expect it to generate $899 billion in sales this year, according to Forbes.
The current market environment has investors turning towards safe stocks that are not impacted by the economic downturn. Food stocks, that fall under the consumer staples sector, are a decent inflation hedge as their sales demand continues even if the prices are increased. The sector can also maintain its profitability as the rising prices are likely to be passed on to consumers. Some of the popular food stocks include PepsiCo, Inc. (NASDAQ:PEP), Archer-Daniels-Midland Company (NYSE:ADM), and Kellogg Company (NYSE:K).
This year, food prices have recorded their largest annual increase since 1979, growing by 11.4% year-over-year as of August. The price hike has altered consumers’ shopping patterns and overall eating habits as they look for alternative and cheap ingredients. However, despite these high prices, the sector’s performance is relatively stable this year as demand for food products remained intact. According to a report by the US Census Bureau, retail and food services sales in the country were up by 9.2% in Q3 2022 from the same period last year. Moreover, the S&P Food and Beverage Select Industry Index fell by 1.51% year-to-date, compared with a 21.6% drop in the broader market, as of the close of November 2.
According to analysts, investors should focus on food businesses that can reduce their production costs and operating costs to stay afloat during inflationary periods. Moreover, companies with stable cash flows are also recommended by analysts as they often pay dividends to shareholders, which is rewarding in times of financial volatility. Given this, we will discuss some of the best food dividend stocks.
Photo by Heidi Kaden on Unsplash
Our Methodology:
The stocks mentioned below belong to different segments within the food industry, such as food manufacturers, food processors, beverage companies, and restaurants. We analyze these companies through their financial health and dividend policies. These stocks are ranked according to their dividend yields, as of November 2.
12 Best Food Dividend Stocks to Buy Now
12. Brown-Forman Corporation (NYSE:BF-B)
Dividend Yield as of November 2: 1.13%
Brown-Forman Corporation (NYSE:BF-B) is an American beverage company that specializes in the manufacturing of spirits and wines. In September, Truist initiated its coverage on the stock with a Buy rating and an $80 price target. The firm remained positive on the company's long runway of growth which is ahead of the overall whiskey category in the US.
In fiscal Q1 2023, Brown-Forman Corporation (NYSE:BF-B) reported an operating cash flow of over $173 million, compared with $185 million during the same period last year. At the end of the quarter, the company had $900 million in cash and cash equivalents, up from $868 million in the previous quarter. It generated over $1 billion in revenues, which showed an 11.5% growth from the same period last year.
Brown-Forman Corporation (NYSE:BF-B) currently pays a quarterly dividend of $0.1885 per share. The company has a long 78-year history of paying consistent dividends to shareholders. Moreover, it has raised its payouts for the past 38 years, which makes it one of the best dividend stocks on our list. As of November 2, the stock has a dividend yield of 1.13%.
As of the close of Q2 2022, 28 hedge funds tracked by Insider Monkey owned stakes in Brown-Forman Corporation (NYSE:BF-B), compared with 33 in the previous quarter. The collective value of these stakes is over $1.5 billion. Among these hedge funds, Fundsmith LLP was the company's leading stakeholder in Q2.
In addition to PepsiCo, Inc. (NASDAQ:PEP), Archer-Daniels-Midland Company (NYSE:ADM), and Kellogg Company (NYSE:K), Brown-Forman Corporation (NYSE:BF-B) is another prominent dividend food stock to buy.
11. Archer-Daniels-Midland Company (NYSE:ADM)
Dividend Yield as of November 2: 1.67%
Archer-Daniels-Midland Company (NYSE:ADM) is an American multinational food processing company that operates over 270 food processing plants worldwide. In Q3 2022, the company reported revenue of $24.6 billion, which saw a 21.3% growth from the same period last year. The company's operating cash flow came in at $3.34 billion. It also paid $677 million in dividends to shareholders, up from $626 million in the prior-year period.
On November 2, Archer-Daniels-Midland Company (NYSE:ADM) declared a quarterly dividend of $0.40 per share, in line with its previous dividend. The company has been paying dividends consistently for the past 90 years and has raised its payouts for 49 years in a row. This makes it one of the best dividend stocks on our list. As of November 3, the stock has a dividend yield of 1.67%.
In October, Baird raised its price target on Archer-Daniels-Midland Company (NYSE:ADM) to $98 with an Outperform rating on the shares. The firm appreciated the company's strong underlying demand and its strategic acquisitions.
Archer-Daniels-Midland Company (NYSE:ADM) was a part of 42 hedge fund portfolios in Q2 2022, the same as in the previous quarter, as per Insider Monkey’s data. The stakes owned by these hedge funds have a consolidated value of nearly $659 million.
Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
10. McCormick & Company, Incorporated (NYSE:MKC)
Dividend Yield as of November 2: 1.92%
McCormick & Company, Incorporated (NYSE:MKC) is a Maryland-based food company that specializes in spices, flavors, and seasonings. The company is one of the best dividend stocks on our list as it has been raising its dividends consistently for the past 36 years. It currently pays a quarterly dividend of $0.37 per share and has a dividend yield of 1.92%, as of November 2.
In September, Barclays maintained an Equal Weight rating on McCormick & Company, Incorporated (NYSE:MKC) with an $82 price target. The firm highlighted the company's recently-announced earnings.
In the third quarter of 2022, McCormick & Company, Incorporated (NYSE:MKC) reported revenue of $1.6 billion, which showed a 3.2% growth from the same period last year. Year-to-date, its operating cash flow came in at $250 million. It also paid $297.5 million in dividends during the quarter, compared with $272.5 million during the prior-year quarter.
At the end of Q2 2022, 33 hedge funds tracked by Insider Monkey owned investments in McCormick & Company, Incorporated (NYSE:MKC), with a total value of over $1.48 billion. Some of the biggest Wall Street names owned stakes in the company in Q2, including Ian Simm, Jim Simons, and Cliff Asness.
9. The Kroger Co. (NYSE:KR)
Dividend Yield as of November 2: 2.23%
The Kroger Co. (NYSE:KR), an American multinational retail corporation, reported earnings beat in its second-quarter results. Given this, Exane BNP Paribas upgraded the stock to Outperform this October with a $51 price target. The firm called the stock one of the best names in the food retail sector.
In Q2 2022, The Kroger Co. (NYSE:KR) reported an operating cash flow of over $2.4 billion. The company's revenue for the quarter came in at $34.6 billion, up 9.3% from the same period last year. It also repurchased $309 million worth of shares and also authorized a new $1 billion share repurchase program.
The Kroger Co. (NYSE:KR) has raised its dividends for 16 years in a row, coming through as one of the best dividend stocks on our list. The company pays a quarterly dividend of $0.26 per share for a dividend yield of 2.23%, as of November 2.
As per Insider Monkey’s Q2 database, 49 hedge funds owned stakes in The Kroger Co. (NASDAQ:KR), growing from 45 in the previous quarter. Those stakes were collectively valued at over $4.3 billion, compared with $5.1 billion worth of KR shares owned by hedge funds in Q1.
8. Hormel Foods Corporation (NYSE:HRL)
Dividend Yield as of November 2: 2.25%
Hormel Foods Corporation (NYSE:HRL) is an American food processing company that sells a wide range of food products to its consumers. The company is a Dividend King as it has been raising its dividends for the past 56 years. Currently, it offers a quarterly dividend of $0.26 per share and has a dividend yield of 2.25%, as of November 2.
In fiscal Q3 2022, Hormel Foods Corporation (NYSE:HRL) reported an operating cash flow of $186 million, which showed a 143% growth from the same period last year. The company's cash and cash equivalents amounted to over $850.3 million, compared with $613.5 million during the prior-year period.
In September, Argus maintained a Buy rating on Hormel Foods Corporation (NYSE:HRL) with a $53 price target, appreciating the company's record sales in its recent quarter. The firm also appreciated the company's strong and clean balance sheet and its long history of raising dividends.
At the end of June 2022, 27 hedge funds tracked by Insider Monkey owned stakes in Hormel Foods Corporation (NYSE:HRL), down from 30 in the previous quarter. These stakes are collectively valued at over $434.5 million.
7. Tyson Foods, Inc. (NYSE:TSN)
Dividend Yield as of November 2: 2.73%
Tyson Foods, Inc. (NYSE:TSN) is one of the largest processors of chicken, beef, and pork globally. In October, Piper Sandler maintained a Neutral rating on the stock with a $68 price target, highlighting the consumer demand in the current market situation.
Tyson Foods, Inc. (NYSE:TSN) reported revenue of $13.5 billion in fiscal Q3 2022, up 8.2% from the same period last year. The company’s operating cash flow for the quarter came in at $666 million and it generated $190 million in free cash flow. It had over $1 billion in cash and cash equivalents and $9.3 billion in total current assets.
Tyson Foods, Inc. (NYSE:TSN) pays a quarterly dividend of $0.46 per share and has a dividend yield of 2.73%, as of November 2. The company is listed as one of the best dividend stocks as it has been raising its payouts for the past 10 years.
As of the end of the June quarter, 37 hedge funds tracked by Insider Monkey owned stakes in the food company in Q2, with a total value of $1.15 billion. Cliff Asness’ AQR Capital owned over 3.2 million shares in Tyson Foods, Inc. (NYSE:TSN) worth $278.4 million, becoming the company’s largest stakeholder in Q2.
6. PepsiCo, Inc. (NASDAQ:PEP)
Dividend Yield as of November 2: 2.58%
PepsiCo, Inc. (NASDAQ:PEP) is one of the world's largest multinational food, snack, and beverage companies. The company's operating cash flow for the first nine months of the year stood at $6.3 billion. It had over $6.4 billion in cash and cash equivalents, up from $5.6 billion nine months ago. The company expects to pay $7.7 billion to shareholders in FY22, $6.2 billion of which will represent dividend payments.
PepsiCo, Inc. (NASDAQ:PEP), one of the best dividend stocks, holds a 50-year track record of consistent dividend growth. The company pays a quarterly dividend of $1.15 per share and has a dividend yield of 2.58%, as of November 2. The company is a good dividend stock in the food sector alongside Archer-Daniels-Midland Company (NYSE:ADM) and Kellogg Company (NYSE:K).
Appreciating the company's flexibility in the current environment, Barclays raised its price target on PepsiCo, Inc. (NASDAQ:PEP) to $185 with an Overweight rating on the shares.
The number of hedge funds tracked by Insider Monkey owning stakes in PepsiCo, Inc. (NASDAQ:PEP) stood at 65 in Q2 2022, growing from 62 in the previous quarter. The collective value of these stakes is over $5.28 billion. Among these hedge funds, Fundsmith LLP was the company's largest stakeholder in Q2.
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Disclosure. None. 12 Best Food Dividend Stocks to Buy Now is originally published on Insider Monkey.
