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ConAgra Foods(CAG - Get Report) pays out an identical yield to Paychex right now: 3.91%.
This week, the firm announced that it would be paying a fourth-straight 24-cent dividend on August 29. I suspect that it'll be CAG's last payout at the 24-cent level -- after all, the $10 billion food stock earns plenty of cash right now. ConAgra owns a portfolio of well-known food and kitchen product brands, such as Parkay, Healthy Choice, and Chef Boyardee -- and relying on those brands has been CAG's saving grace in this market.
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That's because cost inflation has been squeezing margins at most food processing firms. Because CAG has a strong portfolio of sticky brands to fall back on, it's able to pass more costs onto customers than they'd tolerate from a private-label competitor. When the dust settles, private label brands are likely to become a more important part of ConAgra's sales again.
Finally there's packaging supply firm
MeadWestvaco(MWV). Even if you're not familiar with MeadWestvaco's product offerings, you've probably come in contact with them. The firm provides packaging solutions used for everything from cosmetics to cigarettes to food products. That consumer staple exposure is a big boon to the firm's sales, particularly now that it has unloaded its more economy-dependent office supply business from the corporate umbrella.
Emerging markets are a big growth area for MWV, where the firm already has significant exposure to Brazil (and has for more than 60 years) as well as a growing presence in India. As consumption increases at the hands of burgeoning middle-class populations in those countries, this packaging firm should benefit in a big way.
MWV currently pays out a 25-cent dividend, a payout that currently weighs in as a 3.42% yield. With ample cash generation capabilities and a manageable debt load, the way is paved for a dividend hike in the next quarter.
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-- Written by Jonas Elmerraji in Baltimore.