Investors seeking a steady stream of income often find themselves drawn to undervalued stocks with a history of paying consistent dividends. These hidden gems offer a unique opportunity to capitalize on potential long-term growth while generating a reliable income stream. Two such companies, McCormick and Stanley Black & Decker, have underperformed the S&P 500 over the past three years but boast stable businesses and attractive dividend yields.
McCormick, a global leader in the flavor and spice industry, operates in over 150 countries and generates annual sales exceeding $6.5 billion. Its impressive portfolio of brands holds leading market positions, and the company has recently declared its 100th consecutive quarterly dividend payment of $0.42 per share, yielding a respectable 2%. Management’s focus on innovation and cost savings initiatives, such as the Comprehensive Continuous Improvement program, has driven a 60-basis-point improvement in gross margins. As the company divests non-core assets and targets high-growth opportunities, it is poised to continue delivering value to shareholders.
Stanley Black & Decker, a household name with a diverse portfolio of brands including DeWalt and Craftsman, has made significant strides in reducing its cost structure and expanding margins. The company’s Q2 gross margins jumped 28.4%, or 600 basis points, compared to the prior year, and its debt reduction efforts have resulted in $1.2 billion in savings. With a dividend yield of 3%, Stanley Black & Decker offers a compelling combination of income generation and long-term growth potential.
Both companies have struggled to keep pace with the broader market, but their efforts to improve operational efficiency and reinvest in high-opportunity products and brands position them for a rebound in the years ahead. As investors wait for these stocks to regain traction, they can rely on the steady income generated by their respectable dividend yields.
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