For Immediate Release
2 Consumer Staples Stocks to Buy with Dividend Yields Over 5%
Easing inflation is starting to make several consumer staples stocks more attractive as opportunity continues to brew. The prospects of a strengthening consumer could captivate the earnings potential for many consumer-centric companies.
Considering this scenario here are two consumer staples stocks that investors may want to consider as their outlook has brightened and they offer stellar dividends.
British American Tobacco
Big tobacco companies are known for their lucrative dividend yields and British American Tobacco’s stock looks compelling at the moment with a Zacks Rank #2 (Buy).
With an enticing 8.70% dividend yield, British American Tobacco’s top and bottom line growth has become more intriguing as well. Notably, British American Tobacco’s dividend yield is nicely above its hefty industry average of 5.35% and towers over the S&P 500’s 1.46% average.
Furthermore, earnings are now expected to be up 4% in fiscal 2023 and rise another 5% in FY24 at $5.05 per share. Total sales are expected to dip roughly -1% this year but rebound and rise 4% in FY24 to $36.43 billion.
Even better, at $34 a share British American Tobacco stock trades at just 6.9X forward earnings which is attractively beneath the industry average of 9.5X and the benchmark’s 20.3X.
Among apparel companies, Guess Inc. is worthy of investors’ consideration and also sports a Zacks Rank #2 (Buy). Guess’ outlook is strengthening as easing inflation should allow consumers to spend more on clothing and fashion accessories.
This makes Guess stock attractive with its 5.85% dividend yield significantly above the benchmark while many of its textile and apparel peers don’t offer dividends.
With that being said, Guess’ earnings are forecasted to rise 2% in its current fiscal 2024 and edge up another 6% in FY25 at $2.99 per share. On the top line, sales are projected to be up 3% in FY24 and rise another 3% in FY25 to $2.84 billion.
With Guess stock trading at $20, its P/E valuation also stands out at 7.2X forward earnings. This is well below the benchmark and attractively beneath its industry average of 9.8X.
British American Tobacco and Guess stock look attractive at the moment considering their favorable outlooks and stellar dividends. Now appears to be a good time to buy with both of these consumer staples stocks starting to offer strong value to investors.
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