3 Top Dividend Stocks to Eat Up in 2024
As other investors grow more euphoric over the tech sector, perhaps it’s smart to take on a more contrarian mindset, with more defensive plays like those in the food scene. While you are diving into the food scene, you should also look for high-value dividend stocks.
In the consumer-packaged food scene, I see plenty of value and terrific dividend yields that may not last once rates backtrack by a few percentage points over the next few years. I find these defensive dividend plays most intriguing for investors looking to diversify beyond just tech and AI!
Let’s check out a trio of dividend payers in the food scene that income lovers may wish to eat up in this new year.
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Kellanova (K)
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The Kellogg spin-off may be the best thing for income investors since Pop-Tarts. Indeed, Kellanova (NYSE:K) is the more intriguing of the two stocks—the other being W.K. Kellogg (NYSE:KLG)—to be spun off from the original Kellogg’s. It’s not just the owner of Pop-Tarts but the delicious roster of consumer-packaged goods brands. Of course, less exposure to the cereal market, which has staled on the growth front in recent years, is a positive for investors who value growth and dividends. Trust us, if you are looking for strong dividend stocks, you can’t go wrong here.
The consumer-packaged goods firm’s main attraction has to be the 4.05% dividend yield. It’s not just a generous dividend but one that could grow over time as the firm looks to unleash the power of its tasty snack portfolio.
The stock recently surged following a solid quarterly report that saw notable strength in Europe (sales rose 10% year over year). As sales recover in the United States while Kellanova continues resonating with overseas customers, I view K stock as a very intriguing defensive dividend play to stash in the pantry. At 23.29 times trailing price-to-earnings, shares look cheap for the brands you get.
W.K. Kellogg (KLG)
Source: JHVEPhoto / Shutterstock.com
For deep-value investors who want the other part of the original Kellogg’s (the old-time cereal business minus the snacks), there’s W.K. Kellogg, a less-exciting but intriguing performer that may very well outdo Kellanova from here. The stock has been heating up of late, now up more than 27% from its October 2023 lows despite pretty muted analyst expectations.
Indeed, most analysts pin KLG stock as more of a hold than a buy. It’s the old-time cereal pure play that doesn’t really have a promising growth narrative. Morgan Stanley recently started coverage of the firm with an equal-weight rating. Like many other skeptics, the bank is concerned about a lack of growth prospects.
Even without much in the way of growth, I think the dividend yield of 4.89% and modest estimates make the stock easier to get behind if income and margin of safety are what you seek. Personally, I like Kellanova better, as it’s a compelling place to get growth and yield.
General Mills (GIS)
Source: JHVEPhoto / Shutterstock.com
Finally, we have General Mills (NYSE:GIS), a cereal and snack food firm that spent most of 2023 in a nasty slump. Today, the stock’s down around 30% from last year’s high, just north of $90 per share. The cereal scene is a tough place to compete. However, General Mills has done a respectable job of innovating.
Don’t believe me?
Just have a look at the new version of Cheerios (introducing the new Cheerios Veggie Blend!), which adds fruits and veggies to its cereals. The offering reportedly is made with a quarter cup of real fruit and veggies! Sounds tasty. But is it tasty or intriguing enough to get consumers to reach for it at the local grocer? I’m not quite sure.
Don’t count on the new cereal variants to spark a rebound in shares anytime soon. Inflation and economic woes may cause some to opt for the cheapest (off-brand) cereals on the grocery store shelf or, better yet, skip the whole middle aisle altogether in favor of the fresh produce section.
In any case, I’m a fan of the 3.74% dividend yield, the 15.42 times trailing price-to-earnings multiple, and General Mills’ willingness to experiment with something new. If you are looking for great dividend stocks, jump onto this one.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.
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