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5 Consumer Stocks For Comfortable Retirement Income

Consumer Discretionary stocks

Consumer stocks are under intense scrutiny due to shifting habits and mixed results. The takeaway from the sector is that not all consumer stocks are made the same; some are built to stand the test of time and deliver consistent returns to investors. Among the qualities driving results in today’s market are brand and quality, which you will find on this list today. These stocks have well-established brands and sound management, which have sustained their business and growth for decades. 

While no consumer stock is immune from economic conditions, these stocks have healthy balance sheets, can pay dividends and sustain operations regardless of the conditions. They also qualify as hum-drum, non-exciting investments and offer a cheap entry into high-quality distribution growth stocks that buy-and-hold forever investors can appreciate.

Albertsons Companies: A Good Buy with or without the Kroger Deal 

The biggest news in the Albertsons (NYSE: ACI) world is the potential deal with Kroger (NYSE: KR). The deal values the stock at a significant premium to the price action and seems to be getting closer to closing. However, Albertson’s is a good buy, with or without the deal, trading at its current price point. The stock is trading at only 8X its earnings and pays a healthy 2.15% yield with a robust trajectory for distribution growth. 

The company pays only 15% of its earnings with the distribution at $0.48 and has made annual increases. Distribution increases were halted when the KR deal came into play but would likely be resumed if the deal fell apart. Analysts rate the stock at Hold and see it moving to the $27 level in alignment with the acquisition valuation. Albertson's investors that get bought out can use the proceeds to invest in Kroger, another high-quality distribution growth stock trading at value levels. 

ACI stock chart  

Winnebago Normalization Supports Dividend Growth Outlook 

Winnebago’s (NYSE: WGO) business is receding in 2023, but normalization is at hand. The business decline is compared to record levels in 2022 that were driven by pandemic demand. The takeaway is that business is normalizing after the crisis at a level well above 2019. This situation has the dividend in fantastic shape and the outlook for distribution growth robust. The company pays only 15% of its earnings and has a solid balance sheet with no red flags. 

The payout ratio is compounded by a 15% distribution CAGR, which may continue in 2024. The outlook is for business to sustain at present levels through 2024 further strengthening the company’s financial position. Cash on the balance sheet is about 8X the prepandemic levels, and leverage is ultra-low. 

WGO stock price chart

WD-40 Company Leans into Growth 

WD-40 Company (NYSE: WDFC) is leaning into widening its reach and deepening its penetration of markets.  This is seen in the annual earnings results, although quarter-to-quarter results could be better.  The salient point is that cash flow is solid, growing, and sufficient to sustain the distribution growth outlook. The stock pays about 1.65%, with shares near $200, and it’s increased at a double-digit pace for the last few years. The pace of increases may decline given the 65% payout ratio, but earnings and distribution growth are expected for the foreseeable future. Analysts rate the stock a Buy and see it advancing 30% to $250. 

WDFC stock price chart

Shoe Carnival For Aggressive Distribution Growth 

Shoe Carnival (NASDAQ: SCVL) is experiencing normalization like many consumer stocks, and it is normalizing above pre-pandemic levels. This company leaned into digital to improve business, including CRM, loyalty programs, and DTC sales channels, which are all paying off. The best news is that this stock trades at a low 7X earnings while paying 2% in yield with an outlook for sustained double-digit distribution increases. The company pays only 12% of its earnings with earnings growth forecast for the next 2 years at least. Only 1 analyst is tracked by Marketbeat, which is not much but offset by a high 66% institutional interest and bullish institutional activity in 2023. 

Shoe Carnival Stock Price chart

Williams-Sonoma Sells Lifestyle and Quality

Willams-Sonoma (NYSE: WSM) is a lifestyle and home decor brand with a lot going for it. Its portfolio of brands includes Pottery Barn and Pottery Barn Kids and is well-entrenched in the brick-and-mortar and eCommerce channels. The stock is another great value, trading at only 11X earnings, and pays a solid 2.2% yield at this level. The payout is less than 25% of earnings and is backed up by a solid balance sheet, so the 15% distribution CAGR is sustainable. Analysts rate the stock at Reduce, but take this with a grain of salt. The Reduce rating is due to weak ratings issued earlier in the year that a series of upward price target revisions have offset. The consensus estimate lags the market, but the fresh targets lead it higher. 

WSN stock price chart

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