Consumer staples companies produce essential items that people require, and these products will remain in demand, even if their stocks fluctuate.
When considering firms that manufacture consumer staples, remember that their products are necessities. This is especially true for food-centric companies like General Mills (GIS 0.01%), PepsiCo (PEP 1.02%), and Hershey (HSY 1.47%). Here’s why these dividend stocks are worth investing in and holding for 20 years or more right now.
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1. General Mills Adapts to Change
General Mills produces food items such as cereals, snack bars, pet food, and baking supplies. It boasts several well-known brands like Blue Buffalo and Cheerios. These brands are staples found in grocery stores and people’s homes, meaning the company is unlikely to face immediate closure.
Despite this, General Mills is grappling with challenges as consumer spending shifts, leading to weaker financial results. The company reported decreased sales and earnings for the fourth quarter of fiscal 2025, and projections for fiscal 2026 remain low.
Management is responding by tweaking product formulations, reassessing its brand portfolio, and controlling costs, which are promising strategies for restoring stability. Historically, General Mills has managed to recover, and its stock is currently available with an appealing 4.8% yield, near record highs. This makes it a worthwhile option for investors seeking income in the long run.
2. PepsiCo’s Strong Brand Portfolio
While General Mills has solid offerings, PepsiCo’s brands are even more prominent. As the second-largest beverage company and the leading producer of salty snacks, PepsiCo also competes with packaged food products. However, it faces challenges due to changing consumer preferences and has been slow to adapt.
In response, PepsiCo has made efforts to realign with market trends by acquiring a Mexican-American food company and a probiotic beverage brand. Although recent financial results haven’t been stellar, the company has a history of successfully navigating tough times, which bodes well for its future.
Currently, PepsiCo offers a historically high dividend yield of 3.9%. If the past is any indicator, long-term investors will likely benefit by purchasing shares while they are out of favor.
3. Hershey Faces Cocoa Cost Challenges
Hershey’s situation is more complex for two main reasons. Although it produces food, its primary product—chocolate—is not a necessity, despite its popularity. Compounding this issue is the recent spike in cocoa prices, a vital ingredient in chocolate.
As cocoa comes from trees, it may take time for these high prices to influence the market. Investors have responded with caution, resulting in a significant drop in Hershey’s stock, which currently offers a 2.9% yield. Despite anticipating sales growth in 2025, rising costs are expected to lead to a significant drop in earnings.
While the outlook seems grim in the short term, long-term demand for Hershey’s affordable treats remains steady, making it a potential investment for those willing to accept some risk.
The Enduring Appeal of Consumer Staples
While items like chocolate, soda, and cereal aren’t essential for survival, these consumer staples companies have consistently provided products that people desire. This trend will persist over the next one, ten, or even twenty years. Although the industry faces current headwinds, these businesses are adept at adapting to market demands. Given the attractive yields from General Mills, PepsiCo, and Hershey, holding onto these stocks for the long term is a prudent strategy for conservative dividend investors.
