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In a previous study, we showed that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. Dividend stocks beat the overall market by an average of 1.36% per year during that period. In another article, we compiled a list of the top 30 US Financial Stocks and showed that high dividend yielding financial stocks performed better than low dividend yielding ones during the last 52-week period.

We prefer high dividend stocks since they generally perform better and usually increase dividend payments over the succeeding 5-10 years. In addition, we are concerned about the Fed’s inflationary monetary policy and want to protect ourselves against inflation. One of the best ways to play defense in an inflationary environment is by investing in high dividend yielding stocks.

We compiled a list of the top 30 US Consumer Goods Stocks (the sector classifications are sourced from Finviz) by market cap and ranked them based on their 12-month dividend yields. The top and bottom halves and their performances are shown below.

HIGHER DIVIDEND YIELDS

Dividend Yield

YTD Return

52-week Return

Altria Group Inc.

MO

5.7%

11.29%

34.46%

Reynolds American Inc.

RAI

5.1%

16.25%

48.17%

Lorillard Inc.

LO

4.3%

33.30%

46.19%

Kimberly-Clark Corp.

KMB

4.0%

7.36%

14.23%

Philip Morris International

PM

3.6%

20.06%

47.23%

HJ Heinz

HNZ

3.5%

5.20%

14.02%

Kraft Foods Inc.

KFT

3.4%

8.49%

17.60%

Procter & Gamble

PG

3.0%

3.76%

8.15%

Avon Products

AVP

2.9%

7.21%

-0.10%

General Mills Inc.

GIS

2.9%

12.07%

13.33%

Kellogg Company

K

2.8%

13.32%

8.23%

Pepsico, Inc

PEP

2.7%

7.34%

9.20%

The Coca -Cola Company

KO

2.7%

3.95%

30.11%

Colgate-Palmolive Co.

CL

2.5%

6.86%

3.28%

Sara Lee Corp.

SLE

2.4%

10.81%

40.04%

Average

11.15%

22.28%

LOWER DIVIDEND YIELDS

Dividend Yield

YTD Return

52-week Return

Hershey Co.

HSY

2.3%

22.12%

23.57%

International Paper Co.

IP

1.8%

18.36%

22.95%

Archer Daniels Midland

ADM

1.8%

15.23%

27.02%

Xerox Corp.

XRX

1.7%

-11.16%

-6.26%

Nike Inc.

NKE

1.5%

-4.06%

6.54%

Johnson Controls

JCI

1.5%

6.44%

21.59%

Mead Johnson Nutrition

MJN

1.4%

6.68%

31.07%

PACCAR Inc.

PCAR

1.4%

-7.34%

11.86%

Ecolab Inc.

ECL

1.3%

4.00%

7.33%

Bunge Limited

BG

1.2%

14.65%

41.82%

Coach Inc.

COH

1.0%

7.27%

39.32%

Estee Lauder Companies

EL

0.8%

19.18%

46.91%

Polo Ralph Lauren

RL

0.4%

15.37%

39.01%

Ford Motor Co.

F

0.0%

-8.40%

15.64%

General Motors Company

GM

0.0%

-10.50%

-3.51%

Average

5.86%

21.66%

In the last 52-week period, the average return of the high dividend yielding consumer stocks was 22.8% vs. 21.66% for the second group of 15 consumer stocks with lower dividend yields. The performance of the first group was much better since the beginning of the year. The average Year-To-Date return of the first group is 11.15%, outperforming the low dividend stocks by more than 5 percentage points.

We prefer high dividend stocks over low dividend stocks since the former generally delivers higher returns. Five consumer stocks with the highest dividend yields are as follows:

1. The Altria Group Inc. (MO): Altria Group Inc., formerly known as Philip Morris Companies Inc., is the parent company of five tobacco corporations. MO has a high dividend yield of 5.7% and returned 34.46% to its investors during the past 12 months. MO recently traded at $26.68 and gained 11.29% year-to-date. The stock has a market cap of $55.85B and P/E ratio of 13.82. MO is one of Gotham Capital’s top stock picks.

2. Reynolds American Inc. (RAI): Reynolds American Inc. is one of the largest tobacco companies in United States. RAI recently traded at $37.13 and it has a 5.1% dividend yield. RAI returned 48.17% during the past 12 months, while it returned 16.25% year-to-date. The stock has a market cap of $21.65B and P/E Ratio of 19.53. RAI is another tobacco company among Gotham Capital’s top stock picks.

3. Lorillard Inc. (LO): Lorillard is the third largest tobacco company in the United States. LO has a dividend yield of 4.3% and returned 46.19% to its investors during the past 12 months. The stock has also performed well since the beginning of 2011, returning 33.30%. The stock recently traded at $107.24. It has a market cap of $15.61B and P/E ratio of 15.82. Jim Simons’ Renaissance had a large position in LO at the end of December.

4. Kimberly-Clark Corp. (KMB): Kimberly Clark Corp. is an US corporation producing paper and personal care products. KMB has a 4.0% dividend yield and returned 14.23% during the past 12 months. KMB recently traded at $66.83 and gained 7.36% year-to-date. The stock has a market cap of $26.41 B and P/E ratio of 15.20. D.E. Shaw had the largest position in KMB among several hedge funds.

Disclosure: I am long PM

Source: Investing in High Dividend Consumer Stocks