Once in a while, an incredible headline hits the financial media or press and goes something like this: “People Making $100,000 to $200,000 Are Living Paycheck to Paycheck.” While many would scoff at that, the reality is wealthy millennials and Gen Z are always buying what they want, when they want. With groceries now cited as having the biggest inflationary pressure, even those living “paycheck to paycheck” are starting to shop at outlets with the lowest prices.

In a recent report, about six in 10 Americans were indeed living paycheck to paycheck in August, according to the commerce data platform PYMNTS and personal loans websites. Additional published reports indicate almost 45% of Americans who make $100,000 or more were in the category, compared with 38% last year.

Jefferies pointed out that groceries have replaced gasoline as the biggest inflation culprit, but other areas like travel and even rent inflation are hitting consumers hard. While screening the massive Jefferies list of consumer-related stocks, we looked for Buy-rated companies that pay dividends where data indicates that the wealthy are shifting their spending to as they cut costs.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Altria

This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business. In December 2018 it acquired 35% of Juul Labs, but the stock was pounded last summer when the FDA announced a ban on all sales of Juul vape pens.

In October, the company, which at the height of its popularity dominated the market with its sweet flavors, agreed to pay $438.5 million in a settlement with 33 states and one territory over marketing its Juul product to teens. Altria announced recently that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space on its own.

While this gets sorted out, it is a good bet that investors will still receive that 8.40% dividend. Jefferies has a $51 target price on Altria stock. The consensus target is $48.73, and shares closed on Monday at $45.15.

This has become the ultimate destination for the American consumer regardless of the economy. Costco Wholesale Corp. (NASDAQ: COST) has a unique business model. It operates membership warehouses, and it buys the majority of its merchandise directly from manufacturers, essentially cutting out the middleman. Costco sells in bulk but also at a lower price, thus fueling its rapid growth. With consumers having more free cash to spend as gasoline prices have dropped, this major retailer may continue to see large revenue gains.

Costco remains one of the few conventional retailers where metrics like store traffic, market share gains and a validated model could bode well for international growth and expansion. The company is largely unharmed by e-commerce, and it continues to add stores in strategically mapped out locations.

Costco Wholesale stock investors receive a 0.67% dividend. The Jefferies price target is $610, and the consensus target is $563.03. The shares closed at $530.92 on Monday.

Dollar General

Shares of the low-cost retail store are offering an incredible entry point after dropping 15% since January. Dollar General Corp. (NYSE: DG) provides various merchandise products in the southern, southwestern, Midwestern and eastern United States.

The company offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, and laundry products; packaged food comprising cereals, canned soups and vegetables, condiments, spices, sugar and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer and wine.

Its consumable products also comprise snacks, such as candies, cookies, crackers, salty snacks and carbonated beverages; health and beauty products, including over-the-counter medicines and personal care products, such as soaps, body washes, shampoos, cosmetics and dental hygiene and foot care products; pet supplies and pet food; and tobacco products.

In addition, Dollar General offers seasonal products, including holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, and automotive and home office supplies. Its home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, and bed and bath soft goods. As of February 2022, Dollar General operated 18,190 stores in 47 states in the United States.

Shareholders receive a 0.86% yield. The $285 Jefferies price target compares with a $269.26 consensus target for Dollar General stock. Shares closed on Monday at $253.10.

The combination of coffee and a unique and loved soft drink makes this a stellar long-term play when prices go higher. Keurig Dr Pepper Inc. (NASDAQ: KDP) was formed in 2018 when Keurig Green Mountain and Dr Pepper Snapple merged. It operates in the United States and internationally through the following segments.

The Coffee Systems segment manufactures and distributes various finished goods related to its coffee systems, K-Cup pods and brewers, as well as specialty coffee. This segment sells its brewers through third-party distributors and retail partners, as well as through its website.

The Packaged Beverages segment engages in the manufacture and distribution of packaged beverages of its brands; contract manufacturing of various private label and emerging brand beverages; and distribution of packaged beverages for its partner brands.

The Beverage Concentrates segment manufactures and sells beverage concentrates primarily under the Dr Pepper, Canada Dry, A&W, 7UP, Sunkist, Squirt, Big Red, RC Cola, Vernors, Snapple, Mott’s, Bai, Hawaiian Punch, Clamato, Yoo-Hoo, Core, ReaLemon, evian, Vita Coco and Mr and Mrs T mixers brands. This segment also manufactures beverage concentrates into syrup.

The Latin America Beverages segment manufactures and distributes carbonated mineral water, flavored carbonated soft drinks, bottled water and vegetable juice products under the Peñafiel, Clamato, Squirt, Dr Pepper, Crush and Aguafiel brands. The company serves retailers, bottlers and distributors, restaurants, hotel chains, office coffee distributors and end-use consumers.

The dividend yield here is 2.09%. Jefferies has set a $44 price target. The consensus target is $40.69, and Keurig Dr Pepper stock closed on Monday at $38.20.

Mondelez

This consumer sector giant makes good sense for conservative investors. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and grocery products.
The primary Mondelez brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.

Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.

Mondelez stock comes with a 2.31% dividend. The Jefferies price target of $75 is higher than the $71.59 consensus target and Monday’s $66.15 close.

Walmart

This giant retailer posted solid third-quarter results as higher grocery sales beat estimates, and it is a top idea for investors looking for retail winners during this year’s holiday shopping season. Walmart Inc. (NYSE: WMT) is the world’s largest retailer, operating retail stores under the formats of Walmart Stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States, as well as a growing e-commerce business. Internationally Walmart also operates locations in several countries, including Argentina, Brazil, Canada, China, Japan, Mexico and the United Kingdom.

Each week, nearly 260 million customers and members visit the company’s 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries. It had fiscal 2021 revenue of nearly $560 billion, and Walmart employs approximately 2.2 million associates worldwide.

Investors receive a 1.46% dividend. Walmart stock has a $175 target price at Jefferies. The consensus target is $160.27. Shares were last seen trading at $153.51 apiece.

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These six top consumer stocks have reasonable upside to the Jefferies targets, and they all come with very dependable dividends. With even moderate appreciation in their share prices, investors should be looking at double-digit total return potential. In addition, the squeeze put on pocketbooks makes them attractive in the consumer arena, as they should easily ride out the storm until prices stabilize.

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