Consumer staples have long been prized for their ability to generate strong cash flows and dividends for their investors. After all, no matter what the economy is doing, we still need to eat, wash our hair, and brush our teeth. For firms in the sector—like our latest Best Dividend Capture Pick—it can mean decades’ worth of dividend growth. Our pick alone has managed to raise its payout for nearly 40 years straight, including its latest 7.1% increase!
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
The secret to our pick’s success is in its niche. Our pick is one of the largest producers of packaged foods. But we’re not talking cereal or noodles. Our pick is in the ingredient business, producing spices, sauces, and other needed flavors to make meals and other products zing. The win is these ingredients come with slightly higher margins than other packaged foods. This has provided plenty of cash flows to its bottom line for years.
The best part is our pick has found plenty of growth as well. This has included its commercial side. Businesses and other food producers look to our pick to find new flavors and launch new products. This provides long-term contracts and cash. Additionally, our pick has continued to use M&A to its advantage, adding brands and flavors to its wide umbrella. Better still, it has been able to leverage many of these brands into tangential products and flavors across its entire product line. That’s a huge win and only strengthens brand retention and profits.
With this in mind, our investors have continued to support our pick’s shares through good times and bad. This has made it a wonderful dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Monday, December 30, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 5.0 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our consumer staple could be a lucrative option.
