There’s nothing like seeing cash automatically deposited into your accounts. Some companies hold such strong positions in their industries that they can share a portion of their profits with shareholders through regular dividend payments.
Right now, income investors may find some attractive opportunities in the consumer discretionary and consumer staples sectors. home depot (HD 1.61%), PepsiCo (pep 1.07%)And starbucks (SBUX +0.63%) All are now giving above average yields, and each looks like an excellent buy for May.
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home depot
Home Depot has proven to be a resilient business in a lean operating environment. Despite higher interest rates than people are used to and a still-weak housing market, its comparable sales are projected to increase by 0.3% in 2025. It also made its 156th consecutive payment quarterly dividend in March.
On an annualized basis, the dividend totals $9.32 per share, giving it a forward yield of 2.9% – close to three times the average yield. S&P 500. Home Depot supports its dividend with more than enough profits, paying out 64% of trailing earnings and 72% of free cash flow over the last year.
today’s change
(-1.61%) $-5.19
current price
$317.45
key data points
market cap
$316B
day limit
$316.80 -$324.00
52wk range
$310.40 -$426.75
volume
5M
average volume
4M
gross margin
31.33%
dividend yield
2.91%
The fourth quarter of 2025 was Home Depot’s fifth consecutive quarter of same-store sales growth. As the housing market improves, management is investing to expand its professional client business, which it estimates is a $700 billion market opportunity.
The company’s recent acquisitions of SRS Distribution, GMS and Mingledorf have expanded its market to $100 billion. It is expanding its sales force, expanding trade credit, and improving its order management systems to boost its pro customer segment.
Management believes that these investments will drive future earnings growth. That means more dividend growth on an already attractive yield, and potential share price gains.
today’s change
(-1.07%) $-1.67
current price
$154.62
key data points
market cap
$211b
day limit
$154.38 -$157.30
52wk range
$127.60 -$171.48
volume
4.9M
average volume
6.5M
gross margin
54.22%
dividend yield
3.68%
PepsiCo
PepsiCo has been another resilient brand amid high inflation and macroeconomic headwinds. It just posted a solid first-quarter earnings report and recently increased its dividend for the 54th consecutive year.
The annual dividend is currently $5.69, giving it a forward yield of 3.7%. PepsiCo paid out 89% of its earnings and 87% of free cash flow last year. Typically, income-focused investors want to see lower payout ratios because they indicate the company has more flexibility for sustainable dividend growth, but these ratios should decline as PepsiCo’s earnings grow.
Organic revenue increased 2.6% year over year in Q1, with core earnings per share up 5% on a constant-currency basis. The faster earnings growth reflects recent efforts to better control costs within the business, and PepsiCo may have more room to improve on that front. Ongoing productivity initiatives, headcount reductions, plant closures, and the use of artificial intelligence (AI) to optimize the supply chain should boost earnings and help continue the dividend-growing streak.
PepsiCo It has a roster of top brands, including Doritos, Fritos, Cheetos, Gatorade and Mountain Dew, generating $95 billion in trailing 12-month revenue. It’s a consumer goods powerhouse that can generate earnings and pay dividends for many years, as it has done for more than half a century.
today’s change
(0.63%) $0.66
current price
$104.92
key data points
market cap
$120B
day limit
$104.25 -$105.43
52wk range
$77.99 -$107.55
volume
146K
average volume
7.8M
gross margin
15.85%
dividend yield
2.34%
starbucks
starbucks undergoing change with former Chipotle Mexican Grill CEO Brian Niccol is leading the effort. He previously did excellent work with that fast-casual restaurant chain, and so far, Starbucks’ early results are looking encouraging.
Starbucks recently paid its 64th consecutive quarterly dividend. Its quarterly distribution of $0.62 brings its forward yield to 2.4%. The only problem is the payout ratio. Starbucks paid out 187% of earnings and 102% of free cash flow last year, but that’s not as worrying as it seems. It should see higher earnings over the next few years to maintain and grow the dividend.
It’s already showing progress, with adjusted earnings per share growing 22% year over year in Q1. Global comparable store sales also rose 6%, putting the company on a path to recovery. This reflects Nichol’s strategy to invest deeply in the stores, including adjustments to staffing, scheduling and technology to improve the customer experience.
The company is also seeing improvement overseas, with all top 10 markets reporting sales growth in the quarter. The trends are so positive that management has raised its full-year outlook and now expects adjusted earnings to be between $2.25 to $2.45.
A dividend cut is always possible if business conditions deteriorate, but the return to top- and bottom-line growth last quarter suggests the turnaround strategy is beginning to bear fruit. Consensus Wall Street estimates call for earnings to rise to $3.01 in fiscal 2027 and $3.68 in fiscal 2028. Assuming Starbucks meets those expectations, it could be an undervalued dividend stock.