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In a previous article, we compiled a list of 30 mega-cap U.S. consumer goods stocks and showed that high dividend consumer stocks have over performed the consumer stocks with low dividends since the beginning of this year. Since high dividend stocks usually pay off better and tend to increase their dividend payments over the succeeding 5-10 years, we prefer high dividend stocks over low dividend ones.

On the other hand, not all high dividend consumer goods stocks have displayed a stellar performance recently. Defensive investing with high dividend stocks may not yield the best returns in a bull environment. However, investors may need to be more cautious of the upcoming inflationary environment in near future and pick defensive stocks to better protect themselves against inflation.

We compiled a list of 38 U.S. consumer goods stocks (the sector classifications are sourced from Finviz) that have a market cap between $4B and $10B 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

Pitney Bowes Inc.

PBI

6.0%

4.90%

13.3%

Mattel Inc.

MAT

4.0%

6.43%

25.2%

Clorox Corp.

CLX

3.1%

13.03%

11.7%

MeadWestvaco Corp.

MWV

3.0%

30.03%

41.5%

Molson Coors Brewing Co.

TAP

2.4%

-7.24%

8.8%

Hubbell Inc.

HUB.B

2.2%

11.14%

49.8%

Hasbro Inc.

HAS

2.2%

1.93%

16.9%

Whirlpool Corp.

WHR

2.2%

-4.51%

-17.5%

The J.M. Smucker Company

SJM

2.2%

17.74%

34.7%

McCormick & Co Inc.

MKC

2.1%

8.78%

31.9%

Avery Dennison Corp.

AVY

2.0%

0.26%

21.2%

Sealed Air Corp.

SEE

2.0%

1.74%

22.3%

Dr Pepper Snapple Group Inc.

DPS

1.8%

19.24%

11.5%

Hormel Foods Corp.

HRL

1.5%

18.51%

46.9%

Gentex Corp.

GNTX

1.5%

3.17%

51.0%

Coca-Cola Enterprises Inc.

CCE

1.4%

17.17%

67.7%

Church & Dwight Co.Inc.

CHD

1.2%

19.95%

25.1%

Fortune Brands Inc.

FO

1.2%

7.20%

36.1%

Newell Rubbermaid Inc.

NWL

1.1%

1.05%

13.0%

AVERAGE

8.98%

26.91%

LOWER DIVIDEND YIELDS

Dividend Yield

YTD Return

52-week Return

Harley-Davidson Inc.

HOG

1.1%

7.55%

15.5%

Corn Products International

CPO

1.0%

17.40%

60.4%

Tyson Foods Inc.

TSN

0.6%

7.22%

4.1%

Ball Corp.

BLL

0.5%

15.50%

54.6%

Phillips-Van Heusen Corp.

PVH

0.2%

8.07%

21.1%

BorgWarner Inc.

BWA

0.0%

-2.06%

90.1%

TRW Automotive Holdings

TRW

0.0%

3.57%

77.1%

Fossil Inc.

FOSL

0.0%

44.91%

161.5%

Crown Holdings

CCK

0.0%

22.05%

67.4%

Hansen Natural Corp.

HANS

0.0%

30.28%

70.8%

Owens-Illinois Inc.

OI

0.0%

5.31%

5.8%

Energizer Holdings Inc.

ENR

0.0%

4.2%

33.6%

Ralcorp Holdings Inc.

RAH

0.0%

39.22%

46.1%

Navistar International Corp.

NAV

0.0%

17.91%

29.2%

Constellation Brands Inc.

STZ

0.0%

2.53%

27.9%

WABCO Holdings Inc.

WBC

0.0%

16.46%

124.9%

Tempur Pedic International

TPX

0.0%

61.56%

97.6%

Goodyear Tire & Rubber Co.

GT

0.0%

47.17%

40.8%

VeriFone Systems Inc.

PAY

0.0%

17.76%

144.3%

AVERAGE

19.29%

61.72%

In the last 52-week period, the average return of the high dividend yielding mid-cap consumer stocks was 26.91%. The second group of 15 stocks with lower dividend yields performed much better in the same period, returning 61.72% on average. Low dividend stocks also outperformed high dividend stocks in 2011. The average YTD return of the first group was 8.98% vs. 19.29% for the second group. As we expected, the risky consumer stocks with low dividend yields have already benefited much from the recent uptrend so far. Considering the fact that bull markets don't last forever, however, it seems now can be a good time to play more defensively and rotate to high dividend yielding consumer goods stocks.

Seven mid-cap consumer goods stocks with the highest dividend yields are as follows:

1. Pitney Bowes Inc.: Pitney Bowes Inc. is a U.S. company providing packaging and mailing equipments and related services. PBI has a high dividend yield of 6.0% and returned 13.3% during the past 12 months. PBI recently traded at $24.63 and returned 4.90% since the beginning of this year. The stock has a market cap of $5.02B and P/E ratio of 17.00. Larry Robins' Glenview Capital had the largest position in PBI among 300+ funds we are tracking. Daniel Bubis' Tetrem Capital and Phill Gross' Adage Capital are also among PBI investors.

2. Mattel Inc.: Mattel Inc. is a large toy and game company operating worldwide. MAT recently traded at $26.69 and has a 4.0% dividend yield. MAT returned 25.2% during the past 12 months, while it gained 6.43% since the beginning of this year. The stock has a market cap of $9.28B and P/E Ratio of 14.41. MAT is one of Carl Icahn's favourite stocks. Ricky Sandler's Eminence Capital and Ken Fisher's Fisher Asset Management also holds MAT positions.

3. Clorox Corp.: Clorox Corp. is a global company providing chemical and food products worldwide. CLX has a dividend yield of 3.1% and returned 11.7% during the past 12 months. CLX recently traded at $69.95 and gained 13.03% since the beginning of the year. The stock has a market cap of $9.33B and P/E ratio of 17.57. John Rogers, Clint Carlson and Jim Simons have positions in CLX.

4. MeadWestvaco Corp.: MeadWestvaco Corp. is a US company providing packaging solutions to several industries worldwide. MWV has a 3.0% dividend yield and returned 41.5% during the past 12 months. MWV also performed well this year, returning 30.03% year-to-date. MWV recently traded at $33.22 recently. The stock has a market cap of $5.64B and P/E ratio of 18.88. D.E.Shaw, Israel Englander and Cliff Asness hold MWV positions.

5. Molson Coors Brewing Co.: Molson Coors Brewing Co. is a large brewer company producing and selling alcoholic and non-alcoholic beverages. TAP recently traded at $46.50 and has a 2.4% dividend yield. TAP returned 8.8% during the past 12 months, while it lost 7.24% since the beginning of this year. The stock has a market cap of $8.69B and P/E Ratio of 12.70. Chris Hohn's Childrens Investment Fund had more than $300 Million in TAP.

6. Hubbell Inc.: Hubbell Inc. is a global company providing electronic products worldwide. HUB-B has a 2.2% dividend yield and returned 49.8% during the past 12 months. HUB-B recently traded at $65.34 and returned 11.14% year-to-date. The stock has a market cap of $3.94B and P/E ratio of 17.35.

7. Hasbro Inc.: Hasbro Inc. is another large toy and game company operating worldwide. HAS has a 2.2% dividend yield and returned 16.9% during the past 12 months. HAS recently traded at $47.49 and returned 1.93% year-to-date. The stock has a market cap of $6.46B and P/E ratio of 19.07. John Brennan's Sirios Capital, Tom Russo's Gardner Russo and Patrick McCormack's Tiger consumer Management are among HAS investors.

Source: Time to Switch to High Dividend Consumer Stocks