Two Consumer Staples With Bright Outlook For Dark Times We like the Consumer Staples sector there is no secret about that. The sector offers steady revenue and earnings growth, reliable dividends, and very often distribution growth that comes with...

The Analysts Bring Dividend Stocks Into Focus

We like the Consumer Staples sector there is no secret about that. The sector offers steady revenue and earnings growth, reliable dividends, and very often distribution growth that comes with decades of history to back it up. In today's times, with inflation on the rise and the threat of recession growing, these kinds of stocks are more attractive than ever and are getting attention from analysts. The takeaway is that big money managers are starting to point their clients in this direction and that is a tailwind for price action that could produce market-beating returns over the next 12 to 24 months.

The Coca-Cola Company Is The Most Upgraded Staple Stock

The Coca-Cola Company (NYSE: KO) is the most upgraded stock in the Consumer Staples sector over the past three months and the good news is still coming in. The latest Nielson tracking data suggests a rebound in soft-drink sales going into the summer season that has Coke among the leaders. Nielson says The Coca-Cola Company stands out on its screen due to pricing and volume which we think will lead to outperformance relative to the current consensus estimates. Until then, we've had 10 analysts shout outs in the last three months and all but one includes a price target increase. The single outlier includes a price reduction to $69 but this is still above the Marketbeat.com consensus target which is trending higher in all three comparisons.

The Coca-Cola Company is not a bargain trading near $63 but you get a lot for what you pay. The company is expecting solid mid to high-single-digit growth this year, expanding margin, and distribution increases. The stock is paying about 2.8% as well, well above the S&P 500 average, and only has one red flag that concerns us. The payout ratio is a bit high at 70% so we aren't expecting large distribution increases, just steady ones.

Kimberly-Clark Is A High-Yield Winner

Kimberly-Clark (NYSE: KMB) is another highly-valued company that analysts are showing interest in. The company has 14 current ratings and at least 10 of them were refreshed over the past 90 days, 7 of them for the better. The three negative commentaries are still rating the stock at Hold and we don't see that changing anytime soon. As for the price target, the price target has been edging lower over the past 30 and 60-day periods but only marginally so and it is in line with the current price action so the market may be at a bottom. The institutional activity also suggests firm support at or near the $128 level.

Looking at the earnings forecast, we see the potential for an upside surprise in Q2 and for the year. The analyst has been steadily trimming their targets despite the company's favorable outlook and plans to raise prices. In our view, Kimberly-Clark should easily outpace the consensus for 5.7% YOY growth and may even produce sequential growth as well.

The takeaway here is that Kimberly-Clark pays a healthy 3.5% yield and also comes with a positive outlook for distribution growth that is supported by the earnings outlook. The company has been raising the dividend for 49 years which is proof enough management knows how to weather hard times like these. As for the business, the company sells paper and sanitary products so is a must-have item for businesses and consumers alike.