Worried About a Stock Market Sell-Off? This Rock-Solid Dividend Stock Will Let You Sleep Well at Night.
Good dividend stocks can be counted on to produce reliable, high-yield income for investors every quarter, or in some cases every month, no matter what the market does. This is particularly beneficial for retirees looking to supplement their income.
But the benefits of dividend stocks go beyond dividend income. Dividend stocks are one of the best ways to diversify your portfolio against more volatile growth and tech stocks or large-cap S&P 500 exchange-traded funds (ETFs).
That’s because dividend stocks also boost your total return if you reinvest them back into the stock. Further, the best dividend stocks are typically from stable, established companies, often consumer staples, that tend to perform relatively well during market downturns.
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With markets near all-time highs and valuations elevated, investors who are nervous about a major sell-off should certainly consider adding dividend stocks to their portfolios. One of the best and most reliable is J.M. Smucker (SJM +3.11%).
Smucker offers 3.98% yield
J.M. Smucker, or Smucker, is literally a household name, as its broad range of jams, spreads, coffees, snacks, and pet foods are in practically every food cabinet in America. Its brands include its namesake spreads, but also Folger’s coffee, Hostess snacks, and Milk-Bone dog treats, to name a few.
Smucker is a textbook example of a consumer staple stock, as people buy its jars of jelly no matter what the economy is like. In fact, its low-cost basic food staples may be even more popular when times are tight.
Its stability and consistency make it a great dividend stock as Smucker has increased its dividend for 28 years straight. It currently pays out a quarterly dividend of $1.10 per share at a high yield of 3.98%.
Smucker stock has also performed well year to date, up 14%, beating the S&P 500. With the dividend reinvested, it’s up 15%. It hasn’t performed as well during the three-plus-year bull market, but it tends to underperform during bull markets and outperform during corrections. For example, in the 2022 bear market, it was up 20%.
Analysts are bullish
Smucker is also coming off an excellent fiscal fourth quarter with sales up 6% and adjusted earnings rising 20% year over year. It ended the fiscal year, which ended on April 30, with $1.2 billion in free cash flow, up from $816 million the previous fiscal year. Free cash flow is a key indicator of how much cash flow the company has to maintain or raise its dividend.
Its outlook is also strong, prompting a slew of Wall Street analysts to raise Smucker’s price target in recent weeks. The median price target is $125 per share, which suggests 12% upside.
Today’s Change
(3.11%) $3.50
Current Price
$116.00
Key Data Points
Market Cap
$12B
Day’s Range
$113.33 – $116.16
52wk Range
$88.25 – $119.39
Volume
228.1K
Avg Vol
1.8M
Gross Margin
33.19%
Dividend Yield
3.91%
While net sales are anticipated to drop 3% to 4% in fiscal 2027, Smucker’s earnings are projected to rise 7% to 12% as costs for its products, namely coffee, are expected to come down, providing deflationary savings.
Finally, Smucker stock is pretty cheap, trading at 11 times forward earnings. It all makes Smucker a great dividend stock and even more valuable during a market sell-off. It will offset the volatility elsewhere and help you sleep well in choppy markets.
