Best Stocks to Buy in May 2024: TSX Consumer Staples Sector

Consumer staples stocks are a core part of a diversified portfolio. Here are some of the best stocks to consider now!

Kay Ng

Kay began investing in dividend stocks around 2008 via the concept of value investing. Since then, she has expanded into growth investing, including in small caps. Her passion for investing has only grown over the years! After graduating from UBC with a BSc in Computer Science, she took university courses in financial markets, finance, and financial accounting. She has contributed her works to Motley Fool, Sure Dividend, and Seeking Alpha.

Published May 23, 2024 3:45 pm EDT

On investigating the S&P/TSX Capped Consumer Staples Index for ideas, here are some of the best consumer staples stocks to consider buying in May 2024: Alimentation Couche-Tard (TSX:ATD), Empire Company (TSX:EMP.A), Jamieson Wellness (TSX:JWEL), and Premium Brands (TSX:PBH).

ATD 10-year Total Return Level data by YCharts

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Alimentation Couche-Tard

Couche-Tard is a global convenience store consolidator. Many of its locations also provide roadside fuel retailing. The stock has a track record of delivering growth by making strategic acquisitions, paying down debt, keeping costs under control, and innovating. Over the last 10 years, the growth stock delivered total returns of 18% per year. Couche-Tard earns an investment-grade S&P credit rating of BBB+.

Although it only offers a dividend yield of 0.9%, it is a tireless dividend grower that has increased its dividend at an incredible rate. For example, its 10-year dividend-growth rate is 26%. And its last dividend hike was 25% in November. At $77.61 per share at writing, ATD stock trades at about 20 times earnings and analysts believe the stock trades at a discount of approximately 11%.

Empire

For potential better value, investors can turn to Empire. The food stock trades at a price-to-earnings ratio (P/E) of approximately 12.4, while it could grow its earnings at a double-digit rate over the next couple of years. You’d recognize at least some of the banners under the grocery chain: Longos, Rachelle Bery, Safeway, Sobeys, Thrifty Foods, Les Marches Tradition, and Marche BoniChoi.

Interestingly, analysts also believe Empire trades at a discount of about 11%. But at least the low P/E suggests that the market has lower expectations of the stock. At the recent quotation of $34 per share, Empire offers a dividend yield of over 2.1%.

Jamieson Wellness

Jamieson Wellness manufactures, distributes, and markets branded natural health products, including vitamins, minerals, and supplements. At about $26 per share at writing, it trades at a P/E of about 16.6. If it’s able to deliver higher growth over the next couple of years, the consumer staples stock should experience valuation expansion.

At the recent quotation, analysts believe it trades at a meaningful discount of over 20%. It also offers a dividend yield of 2.9%, which is not bad for a consumer staples stock. Its five-year dividend-growth rate is 16%. Its last dividend hike was 11.8% in August.

Premium Brands

Premium Brands owns a diverse range of specialty food manufacturing and food distribution businesses with operations across Canada and the United States. The consumer staples stock is down about 28% from its 2021 peak. The pullback could be a good buying opportunity for a multi-year turnaround.

At $89.89 per share at writing, it offers a dividend yield of 3.8%, which is high compared to its peers. For your information, PBH stock is a Canadian Dividend Aristocrat that has increased its dividend every year since 2013. Its 10-year dividend-growth rate is 9.6%, while its last dividend hike in March was 10.4. At the recent quotation, analysts have a 12-month price target that represents a decent discount of 19% on the stock.