High Dividends In Consumer Non-Cyclicals

By Peter Cherewyk | May 19, 2010 AAA

Investing in dividends is never a guaranteed money maker. High-yield stocks could give your portfolio a lift as long as they keep getting paid. Looking at the company's distribution as a percentage of earnings could give hints of whether the dividend will be cut. A strong cash flow trend is also a benefit if the company is planning on paying its investors. Here are five stocks with dividend yields over 5% with a solid company behind them.

Company Yield Market Cap
Altria Group (NYSE:MO) 6.5% 44.3B
B&G Foods (NYSE:BGS) 6.7% 513M
British American Tobacco (ADR) (NYSE:BTI) 7.3 58.5B
Cal-Maine Foods (Nasdaq:CALM) 5.8% 776M
Compania Cervecerias Unidas (ADR) (NYSE:CCU) 7.6% 2.6B
Reynolds American (NYSE:RAI) 6.7% 15.2B
Data as of market close May 20, 2010.

Beverages
Compania Cervecerias Unidas
(NYSE: CCU) is a beverage company, alcoholic and non, primarily operating in Chile and Argentina. In its fourth quarter of 2009 released March 17, 2010, net profit grew 18.8% to $1.01 per American depositary receipt (ADR). For the full year 2009, net profit grew 41.6% to $3.97 per ADR on sales of Ch$776,544. CCU has an expected long-term growth rate of 8.8%, which is 1% above the S&P 500, and a dividend yield which is much greater than that common to the industry.

Yields In Tobacco
British American Tobacco
(ADR) (NYSE: BTI) currently pays a 5% yield in the trailing 12 months. Booker Group, a U.K.-based wholesaler, released financial year 2010 reports on May 21. Total tobacco sales were up 5.8% compared to a 1.5% decrease in the previous year.

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British American Tobacco currently has a trailing 12-month return on equity (ROE) of 37%. That is a good return on equity, but it isn't the highest on the list. That honor goes to Altria Group (NYSE: MO) with a 97% ROE, while Reynolds America (NYSE: RAI) is sitting at a 20% ROE. Reynolds America and Altria Group are both major players in the tobacco industry yielding around 6.5% each. (Both ROE and ROA measure performance, but sometimes they tell a very different story. This is why they're best used together. Learn more in ROA And ROE Give Clear Picture Of Corporate Health.)

Food And Grocery
B&G Foods
(NYSE: BGS) and Cal-Maine Foods (Nasdaq: CALM) are in the food industry, which weathers economic turmoil but doesn't always give the best gains in a bull market. B&G Foods manufactures and sells food products mainly focusing on long shelf life; for example, vinegar, spices, canned foods or pickles. On May 18, B&G announced a regular quarterly dividend of 17 cents per share, payable July 30 to holders of record on June 30, 2010. At a share price hovering around $10, that's a 6.7% yield.

Bottom Line
Dividends are not guaranteed, but when the markets are popping and locking, a stream of cash is welcome to any investor. These consumer stocks and non-cyclicals will not escape drops but could be worth a deeper look.

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