Stimulate your appetite for dividends with these 3 generous food stocks

Few investment strategies have been as successful as feeding on the actions of major food brands and watching them grow even higher. There is a reason why Warren Buffett, the most successful investor of all time, has traditionally bought these shares. They have great brands that are instantly recognized by consumers. Marketing and brand recognition are recurring business. And remember, everyone has to eat. The business cycle does not really impact most food stocks. These companies generate many predictable profits, which are then paid to investors in the form of generous dividends. In fact, some of the more …

Few investment strategies have been as successful as eating up on top-tier food brands and watching them rise ever higher.

There is a reason why Warren Buffett, the most successful investor of all time, has traditionally bought these shares. They have great brands that are instantly recognized by consumers. Marketing and brand recognition are recurring business. And remember, everyone has to eat. The business cycle does not really impact most food stocks.

These companies generate many predictable profits, which are then paid to investors in the form of generous dividends. In fact, some of the world's leading dividend growth stocks are consumer staples. Certainly, there is a bad year, but most of the time, these stocks are stable producers that continue to grow steadily.

It's an attractive combination.

Let's take a look at three of the best food stocks – names that combine powerful brands with interesting dividends.

High Liner

High Liner Foods (TSX: HLF) is the largest provider of value-added seafood products in North America. Its activities cover everything from traditional fish sticks to salmon and shrimp. Canadian consumers probably recognize the High Liner brand on store shelves, but the company also owns other brands and is a major supplier in the foodservice market.

Unfortunately, things have not gone well for society lately. The latest results show a decrease in sales volume. Consumers are switching from breaded fish products to healthier choices, and a 2018 recall has not helped either. Management has launched a recovery program which should help bring the stock back into organic growth from 2020, but the short term could still be weak.

But the company is still solidly profitable, even in this difficult time. It has just released its 2018 annual results with a business turnover of 1.12 billion USD and profits of 16.8 million USD. Per share, this equates to 0.66 USD in local currency, or 10.7 times the net profit.

It also means that the company can still afford its generous dividend, which currently stands at 8.2%.

Rogers Sugar

There is not much competition in the sugar market here in Canada, with Rogers Sugar (TSX: RSI) and its competitor Redpath dominating the market. This may not be a good solution for consumers, but it is good for investors.

Rogers has been a stable business for years, generating predictable profits, even as consumers are slowly moving away from sweet products. This has resulted in an attractive dividend yield, which currently stands at less than 6%. It is the stereotyped stocks of widows and orphans, generating reliable income, that have defeated a comparable investment in a GIC.

However, Rogers had a sleight of hand spending $ 190 million on the acquisition of a large maple syrup business in Quebec. The maple syrup market is growing as consumers seek to sweeten with more natural products. Rogers plans to acquire new acquisitions in the market, with some organic growth to say the least.

Kraft Heinz

Kraft Heinz (NYSE: KHC) has been making headlines recently and for all the wrong reasons.

The company recently released fourth quarter figures which, frankly, were catastrophic. Earnings were down, with adjusted EBITDA down 16%. It also recorded a $ 15 billion non-cash impairment charge on goodwill and, perhaps worse, at least for dividend investors, the company reduced its quarterly payments by 36%.

But maybe that's the best time to buy. Kraft Heinz is full of leading brands in the diet. Heinz is a dominant player in the condiments market, while Kraft brands include Philadelphia, Jell-O, Maxwell House and the iconic Kraft Dinner, among dozens more. In simple terms, Kraft Heinz is a power plant.

The valuation of the company has not been as convincing over the years. Equities are trading at less than 10 times expected earnings, although analysts are likely to reduce them in the coming weeks. Stocks also report 5%, even after the dividend cut. And you know that Warren Buffett, the majority shareholder, will be working hard with management to recover some of his lost investment.