Two of my favorite pastimes are enjoying good food and finding new ways to generate passive income. For me, the two go hand in hand. The more passive income I can produce, the more my wife and I can spend time on enjoying different food experiences together.
I've found that investing in dividend-paying food stocks can be a great way to satisfy both cravings. I can use the income they produce to fund new food adventures. Starbucks(NASDAQ: SBUX), Mondelez (NASDAQ: MDLZ), and Four CornersProperties Trust(NYSE: FCPT) offer appetizing income streams. Here's a closer look at their dividends.
Caffeinated dividend growth
Starbucks currently pays a 2.5%-yielding dividend. That's well above the S&P 500 index's 1.4% dividend yield.
One of the big things Starbucks brings to the table is dividend growth. The coffee giant has grown its payout at an impressive 20% compound annual rate since it started paying dividends 13 years ago. It most recently increased its payout by 7.5% last September.
Starbucks is in a strong position to continue growing its above-average payout at a strong clip. The company launched its triple-shot reinvention strategy last fall to accelerate growth and increase its profitability. The company aims to grow its already massive store count to 55,000 global locations by 2030 (up from over 38,000) while unlocking over $3 billion in cost savings. These catalysts should drive 10%+ annual revenue growth and 15%+ annual earnings growth over the long term. That strong earnings growth should enable Starbucks to continue increasing its dividend at a solid rate.
Snacking on a steadily rising payout
Mondelez offers a 2.4%-yielding dividend. The global snacking giant has delivered double-digit annual dividend growth over the last five years, including a 10% increase in 2023.
The maker of Oreo cookies and Ritz crackers expects to continue growing at a solid rate. It sees its organic net revenue rising by 3% to 5% this year with high-single-digit adjusted per-share growth. It also expects to continue producing robust free cash flow ($3.5 billion), the bulk of which it will likely return to shareholders through dividends and repurchases. It aims to grow the dividend around the same rate as its adjusted earnings, suggesting a floor growth rate in the high single digits.
Mondelez aspires to accelerate its already solid organic growth rate by making acquisitions. It has completed nine deals since 2018 that have added more than $3 billion in annual revenue. The company is in an excellent position to continue making acquisitions as promising opportunities arise. It has a strong balance sheet, which it recently bolstered by selling its gum brands in developed markets. Its acquisition focus in recent years has been on buying healthier and premium brands to increase its market share in core categories and expand into adjacent ones. Future deals could enable Mondelez to grow its earnings and dividend even faster.
A plate full of dividend income
Four Corners Property Trust offers a very appealing dividend yield of 5.7%. The real estate investment trust (REIT) supports that payout primarily with rental income generated by its portfolio of restaurant properties. It owns over 1,100 properties leased to nearly 150 brands, led by Darden Restaurants concepts Olive Garden (37.1% of its annual base rent) and Longhorn Steakhouse (10.4%). It also owns restaurants leased to Brinker International (Chili's), Buffalo Wild Wings, and many others. On top of that, the REIT has a growing portfolio of nonrestaurant properties (20% are auto service, medical retail, and other retail properties).
The REIT completes a number of acquisitions each year. It spent $333 million to buy 88 properties last year. Restaurants made up 39% of its volume in 2023, with the balance being nonrestaurant retail properties. The company's conservative financial profile gives it the flexibility to continue acquiring income-producing properties.
Four Corners Property Trust's expanding portfolio has grown its income, enabling the REIT to steadily increase its dividend. It has boosted its payout by more than 40% since Darden spun off its real estate to form the REIT in 2015. That payout should continue rising as its portfolio and rental income grow.
Hearty dividends
Starbucks, Mondelez, and Four Corners Property Trust all pay dividends with above-average yields. Further, all three should be able to continue increasing their payouts. That makes them great options for investors seeking to satisfy their hunger for passive income.
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Matt DiLallo has positions in Starbucks. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.
