Kimberly-Clark and Conagra Stocks Plunge but Offer Record Dividend Yields
Two well-known consumer goods companies have seen their stock prices fall sharply over the past three years. Kimberly Clark and Conagra Brands now trade at lower valuations, offering some of the highest dividend yields in the market. Investors looking for income opportunities may find these stocks appealing despite their recent struggles.
Kimberly Clark, the maker of household brands like Huggies and Kleenex, has lost 25% of its value since 2023. The decline comes as sales dropped by 2.1% while adjusted earnings per share rose slightly by 3.2%. The company's performance suffered from weaker demand for personal care products after the pandemic, increased competition from cheaper store brands, and rising costs for materials like pulp. Still, it has raised its dividend for 54 straight years, earning it the title of a Dividend King. Its current yield stands at 4.3%, and it trades at 15 times forward earnings. A recent move to acquire Kenvue could boost growth, with plans to cut $2.5 billion in costs over the next two years.
Conagra Brands, which owns brands like Healthy Choice and Slim Jim, has fared even worse. Its stock has halved in value over the same period, hurt by falling demand for packaged foods as inflation squeezed household budgets. Higher costs for ingredients and labour also weighed on profits, leaving organic sales flat. The company expects earnings of $1.70 to $1.85 per share this year. Yet, with a dividend yield of 7.3%—the highest in the S&P 500—and a price-to-earnings ratio of just 11, it remains a potential bargain for income-focused investors.
Both firms have underperformed compared to the broader S&P 500, which saw gains driven by tech and healthcare stocks. Their struggles reflect broader challenges in the consumer staples sector, where inflation and shifting shopping habits have cut into sales.
Kimberly Clark and Conagra Brands now offer high dividend yields at discounted valuations. The companies face ongoing pressures from inflation and changing consumer behaviour, but their strong dividend histories and potential cost-cutting measures could attract investors. For those with $1,000 to invest, these stocks present a mix of risk and income potential in a volatile market.
