When looking for growth potential, there’s a lot to like about many consumer stocks these days. Consumer spending has been on fire so far this year and it looks like the economy is going to continue to perform strongly — despite the disruption of the Delta Covid-19 variant.
Each of the companies on this list is positioned to take advantage of an aspect of consumer spending. But it gets better. Each of these consumer stocks is also a strong performer as a dividend stock. These picks offer the combination of long-term growth plus the regular income of a dividend payment.
- Campbell Soup Company (NYSE:CPB)
- Ethan Allan Interiors Inc. (NYSE:ETD)
- Hamilton Beach Brands Holding Co (NYSE:HBB)
- H&R Block Inc (NYSE:HRB)
- Medifast Inc (NYSE:MED)
- Mondelez International Inc (NASDAQ:MDLZ)
- Whirlpool Corporation (NYSE:WHR)
There are stocks with larger dividend yields (here’s a recent list if that’s more your target), but this group of consumer stocks is unique for its combination of growth potential and each currently has an A-rating in Dividend Grader.
Consumer Stocks to Buy: Campbell Soup (CPB)
When people were stuck at home and looking for food to stockpile during last year’s pandemic lockdown, they turned to soup. That resulted in a surge of business for Campbell Soup.
In 2021, with people getting outdoors and even visiting restaurants as much of the country opened up, soup sales dropped off. So did CPB stock, which is down 13% so far this year.
However, with another winter approaching and consumers on edge about possible lockdowns because of the surging Delta variant, pantry staples like Campbell soup could see another uptick in sales. That could put CPB stock back into growth mode. In addition, Campbell has a proven dividend track record. CPB’s 3.38% dividend yield makes it an attractive option.
Ethan Allen (ETD)
Shares in American household furnishing chain Ethan Allen had been in a three-year slide prior to the pandemic. Then, consumers who were spending all their time at home and were enriched with stimulus checks started spending. New furniture was a must-have, but supply chain challenges made it tough to find.
Ethan Allen was on a roll as shoppers scrambled to upgrade their homes and home offices with premium furniture. That push to buy new furniture hasn’t let up, even though lockdowns are in the past.
By its fiscal fourth quarter in June 2021, Ethan Allen reported net sales up 94.7% year-over-year, and a record-high order backlog. In addition, the company reported it had paid its regular quarterly dividend plus a special cash dividend. ETD stock has posted gains of 82% over the past 12 months, and it’s also a standout among consumer stocks for its 4.11% dividend yield.
Consumer Stocks to Buy: Hamilton Beach (HBB)
Pandemic lockdowns meant that consumers had to skip eating in restaurants and instead rely on takeout, or meals they made themselves. You can only eat so much Campbell soup, so many people started cooking again. Baking bread resulted in yeast shortages last year, but consumers also replaced or bought new small kitchen appliances. That was good news for small appliance maker Hamilton Beach.
That appetite for new counter-top appliances like coffee makers, blenders and toaster ovens hasn’t let up. In its latest quarter, Hamilton Beach reported revenue up 11.8% year-over-year. The company’s direct e-commerce sales are growing as well, and now account for 32% of sales. Hamilton Beach is forecasting demand for retail and commercial small appliance will continue to be strong through the rest of the year and into 2022.
HBB stock has been in a slump since June, and you can currently pick it up at near-2021 lows. With a 2.43% dividend yield rate, this stock is a nice add to a dividend-focused portfolio.
H&R Block (HRB)
They say that nothing is certain but death and taxes, and that’s why H&R Block is a favorite. HBB stock has been a solid performer in 2021, with a 60% return since the start of the year. I expect that momentum is going to continue.
Income tax season is going to be complicated this year. There are stimulus payments, unemployment benefits, new child tax credits and more to account for during filing. That’s why I expect H&R Block to be doing a brisk business.
The other reason why HBB stock is a favorite? The company pays a regular dividend to investors. It currently has a 4.19% dividend yield, which is the highest on this list.
Consumer Stocks to Buy: Medifast (MED)
One of the lasting effects of 2020 has been the so-called “quarantine 15.” That’s the weight that many people put on as they filled up on comfort food, watched streaming video and avoided the gym.
Medifast’s Optavia health and wellness lifestyle program includes diet meals and drinks, sold primarily through weight-loss coaching programs. The company reported 31% YoY revenue growth for fiscal 2020, led by Optavia sales. With the country re-opening, the rush has been on to shed weight for the return to the office. In Q2 2021, Medifast reported that revenue was still growing, up 17.6% YoY.
Despite a strong year for the company, MED stock has performed modestly for 2021, with a 5% gain to this point. So it’s affordable. In addition, Medifast pays dividends and offers a 2.32% dividend yield.
Medifast may be working hard to help Americans lose the quarantine 15, but Mondelez — or at least the company’s products — played a role in helping them to gain it in the first place.
The multinational food giant owns a wide range of popular snack food brands including Cadbury, Oreo, Ritz and Toblerone. The pandemic was good for snacks, but a return to the office will have its benefits as well, including commuters who stock up on snacks for eating in their cars.
MDLZ stock has been in slow and steady growth mode for the past 5 years, offering a 34% return during that time. In its most-recent quarter, Mondelez reported YoY revenue growth of 12.4%. The company also announced it was increasing its dividend payment to investors by 11%. That puts the company’s dividend yield rate at 2.07%. If you’re looking for consumer stocks that offer both growth and income potential, MDLZ is worth considering.
Consumer Stocks to Buy: Whirlpool (WHR)
One of the big stories of 2020 was the shortage of home appliances. People were upgrading their homes and looking for new models. Some appliances suddenly saw increased use, broke down and needed replacement. At the same time, supply chain and global shipping disruption hit.
The combination meant big backorders for many home appliances. It also meant big growth for WHR stock as Whirlpool sold everything it could make. Shares in the appliance maker rose 142% between last March and the end of 2020.
After peaking at an all-time high close of $252.95 on May 7, WHR shares have slipped, making them more affordable. The nation’s love affair with new appliances appears to be far from over, though. Adding fuel to the fire, a red hot real-estate market means more people buying new homes — and appliances to go with them. In April, Whirlpool more than doubled its revenue increase forecast for 2021. That may turn out to make WHR stock a bargain, especially when you consider the fact that the company also pays a 2.52% dividend yield.