High Dividend Stocks 101

Kraft (KFT) owns an impressive array of brands including Kraft, Maxwell House, Nabisco, Oreo, Oscar Mayer, Philadelphia Cream Cheese, as well as dozens of additional brands. 

The stock, at $28.67, is down just a little from when it was spun off from Altria in 2000.  That really makes them no better or worse that most of the market.  What may make them better is the current dividend of about 4%.  Certainly many stocks that have gone nowhere in the last decade offer lower (or no!) dividends.

If we face continuing recession or worse, Kraft, selling foods and beverages, should be better positioned than many companies to survive.  If inflation becomes more dominant, their brands should offer some pricing power–perhaps enough to maintain current levels of profitability.

In any normal type of market I’d love to buy Kraft at this price.  In this market, and especially this week, I wonder how much lower earnings will drop, and how much the PE (now about 13) will rise.  For now, Kraft stays on my watch list.  How about you?

consumer goods consumer goods, KFT, Kraft, packaged foods

ConAgra Foods (CAG) makes a whole lot (over $12 billion in 2007!) of packaged food.  That food falls into all kinds of categories.  Conagra makes meals, entrees, condiments, sides, snacks, and desserts.  They make branded, private label, and customized food products.  Their products are refrigerated, frozen, and even shelf-stable.  I don’t know why, but shelf-stable meats really freak out my wife.

Some of the brands you’ll likely recognize include ACT II, Banquet, Blue Bonnet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt’s, Kid Cuisine, LaChoy, Libby’s, Manwich, Marie Callender’s, Orville Redenbacher’s, PAM, Parkay, Rosarita, Slim Jim, Reddi-Wip, Snack Pack, Swiss Miss, VanCamp, and Wesson. Is that an all-star lineup?  Perhaps more to the point at the moment, do you think these are product lines destined to suffer greatly in a recession?  I don’t.

At its closing price this past Friday ($14.48, essentially the 1995 price) the yield was over 5%.  So you’ve got 1995 pricing, consumable products people are likely to keep buying, a yield over 5%, and they even make those great fudge bars!  What’s not to love?

consumer goods packaged foods