If you are a dividend lover, the Dividend King list is a great place to start your stock search. With at least 50 annual dividend increases, the companies on this list have proven they are resilient in the face of business adversity and market swings. But conservative investors can hone their search even more by focusing on consumer staples makers, a sector that tends to be resilient to market downturns.
Right now, the three highest-yielding consumer staples Dividend Kings are Universal (NYSE: UVV), Altria (NYSE: MO), and Hormel Foods (NYSE: HRL). But don't rush out and buy any of these stocks just yet, because a high yield alone isn't enough. Here's what you need to know about each of these dividend stocks before you buy.
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Continue » While dividend investors often look at yield first, it is important to consider other factors before buying a stock. Valuation is one such factor, but yield can help inform your decision here, too. For example, Hormel Foods has an attractive 4.7% yield.
That's well above the market's tiny 1% yield and the roughly 2.1% yield offered by the average consumer staples stock. However, the real attraction with Hormel is that its five-year average yield is around 3.6%. That suggests Hormel, which makes packaged food products with a focus on protein, is trading at a historically attractive valuation.
In fact, the stocks' price-to-sale ratio and price-to-book ratio are both below their five-year averages. While the price-to-earnings ratio is above its longer-term average, that's because the company is working through a turnaround. But that turnaround is starting to show promise, with organic sales rising for six consecutive quarters.
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