Adding to 2 stocks that are dividend dynamos

As we progress into the current reporting season, we have continued to learn from consumer packaging companies from ConAgra (CAG) to Lamb Weston (LW) and most recently Procter & Gamble (PG) that price action taken in 2022 year, fuel expectations of consistent margin improvement in the coming quarters.

Moreover, some of these companies, citing the continued elasticity of their brands and products, have said they are planning another round of price hikes in the coming months.

At the same time, the December retail sales report showed that food sales for the December quarter were up 7.8% year-on-year. This combination suggests that consensus forecasts for some consumer products companies, especially consumer food and beverages, may be too conservative for the December quarter and the first half of 2023.

Looking at the AAP portfolio, two such companies come to mind: McCormick & Co. (MKC) and PepsiCo (PEP), both of which have come under pressure in recent weeks.

The consensus forecast is that McCormick’s revenue will grow 1.75% in the first half of this year, while for PepsiCo, the market expects revenue growth of 6.1% in the December quarter compared to 7.8% year-on-year growth. reported in the December retail sales report. .

Despite increasingly conservative earnings expectations, MKC and PEP shares have been down in recent weeks. The same weeks saw an improvement in inflation data, which, combined with 2022 price action, should provide margin leverage in the coming quarters. This discrepancy leads us to dive deeper into MKC and PEP stocks, a move that will increase portfolio exposure to both of these dividend dynamos.

After you receive this notice, we will purchase 145 shares of McCormick & Co. priced at or around $76.50. After the deal, MKC will account for approximately 3.50% of the portfolio.

After you receive this notice, we will buy 45 PepsiCo shares at a price of approximately $168.20. After the deal, PEP will account for approximately 3.9% of the portfolio.

(Please note that we expect to execute these trades at or close to the share price shown above. After the trade is completed, subscribers can see the trade execution price. here. Don’t forget to toggle the chart to sort by purchase date.)

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