After years of relatively low to zero inflation, prices are on the rise. Thanks to diminishing effects of the coronavirus pandemic, the U.S. economy has really started to move. For many consumer products companies, this is proving to be a tough nut to crack. There’s a limit to how much they can raise prices before consumers will begin to balk and walk away. Luckily, there are a select group of firms that truly have pricing power and the ability to pass on rising costs to consumers.
This includes our Best Dividend Stocks List pick in the consumer discretionary sector.
Our pick is one of the largest producers of confections and snack foods in the world, with a variety of number one brands under its umbrella. This focus on snacks and little luxuries has allowed our pick to slowly raise prices during periods of higher inflation like today. In fact, price increases for its core line-up of products helped it overcome higher feedstocks during the last reported quarter and boost sales by nearly 8% during the quarter.
Better still, margins remain high at our pick as it’s continued to move into healthy/organic snacks and confections.
Already a leader in natural snacking, our pick continues to tangentially move some of its top brands into these natural categories. Meanwhile, a hefty dose of M&A continues to boost its focus on this area. So far this year, our pick has added new keto-focused and workout brands to its product line. These bolt-on purchases have already contributed to keeping its margins and sales high.
For investors, this has all translated into a wonderful dividend stock made for these times. Thanks to its pricing power and continued growth into new natural snacks, our pick has become a shareholder’s reward machine, churning out steady dividend growth and increased buybacks.
To summarize, here are five reasons why you should own this stock:
- It has a large international portfolio of brands, with sales hitting nearly $8 billion in the first quarter of 2021 alone!
- Niche product range ensures plenty of free cash flows, clocking in over $3 billion during the pandemic
- Price increases and healthy snacks have helped limit the effects of inflation on its bottom line, with EPS jumping more than 33% year-over-year.
- M&A continues to boost its fortunes with two big deals already this year.
- Healthy payout ratio of 43% and growing yield of 2.02%.
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