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Wintel vs. Consumer Product Giants: 3%-ish Dividend Yields, But Guess Who’s Pricey?

Consumer product companies, stable stocks but less likely to rise in a frothy market, have lagged the S&P 500 so far this year. Investors who’ve ridden riskier stocks year-to-date might be thinking of switching into these shares, and they’re getting some encouragement along those lines.

^INX Chart

^INX data by YCharts

Kraft (KFT), Procter & Gamble (PG) and Clorox (CLX) also offer dividends that yield more than 3%. Beats the 10-year Treasury rate.

KFT Dividend Yield Chart

KFT Dividend Yield data by YCharts

These, of course, are mature companies, so the revenue growth isn’t exactly blistering.

KFT Revenue Growth Chart

KFT Revenue Growth data by YCharts

But perhaps of more concern: the consumer product makers aren’t inexpensive, with PE ratios in the high ‘teens.

KFT PE Ratio Chart

KFT PE Ratio data by YCharts

Which makes one wonder: are there less pricey alternatives? Rather than go down-market in consumer goods, let’s look at two old war houses of technology, Microsoft (MSFT) and Intel (INTC). Microsoft’s PE and Intel’s PE are far lower than the consumer product makers.

MSFT PE Ratio Chart

MSFT PE Ratio data by YCharts

Their dividend yields are a bit lower, but not much.

MSFT Dividend Yield Chart

MSFT Dividend Yield data by YCharts

The Wintel’s duo’s revenue growth is more volatile.

MSFT Revenue Growth Chart

MSFT Revenue Growth data by YCharts

And despite the low PEs, Microsoft and Intel have been huge gainers so far this year, as they’ve enjoyed reappraisals by some investors who’d earlier written them off as old hat. They each generate huge cash flow and strong margins and they’re investing heavily to lessen their reliance on the aging personal computer business.

^INX Chart

^INX data by YCharts

From the editors of YCharts Pro Investor Service which includes professional stock charts, stock ratings, stock screener and portfolio strategies.

Read more articles about: Company Analysis  

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