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One of the industries that typically pays out high dividends is the food products industry. According to an October research report by Credit Suisse, three factors make dividend payments in this industry reasonably secure for the foreseeable future:

1. Sound and strong operating cash flows. Companies in the industry generate high cash flows because of relatively high and stable EBITDA margins, amount of profit converted into cash, and cash-flow return on investments.

2. High surplus cash available. Over the last few years, most companies in the industry have restructured, partially disposed of businesses, and substantially deleveraged their balance sheets, leading to high amounts of surplus cash.

3. Lack of M&A opportunities. Credit Suisse does not see any transformational M&A activity in this sector due to anti-trust considerations. The industry is already highly concentrated globally, so despite being cash-rich, companies are unlikely to spend excess cash on insensible acquisitions. However, small round-up acquisitions -- whereby companies buy parts of a competitor’s business -- are possible. Nestle (OTCPK:NSRGY) recently bought Kraft’s (KFT) frozen-food business.

As companies in the sector have relatively low levels of debt, and there is limited scope for large increases in capital expenditures, companies may consider raising their cash payouts to shareholders in the coming years. Hence, investors looking to add some stable and potentially rising dividend payers may want to pick up some stocks in this sector.

Some of the more notable U.S. and foreign food stocks are listed below with their current dividend yields:

U.S. Companies

1. Heinz (NYSE:HNZ)
Current Dividend Yield: 3.69%

2. Kraft Foods (KFT)
Current Dividend Yield: 3.83%

3. Kellogg (NYSE:K)
Current Dividend Yield: 3.27%

4. General Mills (NYSE:GIS)
Current Dividend Yield: 3.15%

5. Campbell Soup (NYSE:CPB)
Current Dividend Yield: 3.41%

6. The J.M. Smucker Company (NYSE:SJM)
Current Dividend Yield: 2.46%

7. Sara Lee Corp. (SLE)
Current Dividend Yield: 3.02%

Foreign Companies:

1. Danone (OTCQX:DANOY)
Current Dividend Yield: 2.38%

2. Nestle (OTCPK:NSRGY)
Current Dividend Yield: 2.43%

3. Unilever plc (NYSE:UL)
Current Dividend Yield: 3.97%

4. Unilever NV (NYSE:UN)
Current Dividend Yield: 3.89%

Disclosure: Long GIS

Source: 11 Food Stocks Looking Attractive for Dividend Investors