Conagra and Kimberly-Clark stocks plunge despite high dividend yields

Two major consumer staples companies have seen their stock prices tumble over the past three years. Conagra Brands has lost half its value, while Kimberly-Clark has dropped by a quarter. Despite the declines, both now offer high dividend yields and trade at levels some investors consider undervalued.

Conagra Brands' share price has fallen sharply since 2023, now trading near $19. The decline stems from weaker demand for packaged foods as inflation squeezed household budgets. Rising costs for grains and labour also cut into profits, forcing the company to raise prices—only to lose sales volume. Cheaper private-label brands further eroded its market share. For the current fiscal year, Conagra expects flat organic sales and adjusted earnings between $1.70 and $1.85 per share.

Kimberly-Clark's stock has dropped to around $110, a 25% fall over the same period. The company faced challenges from excess inventory in personal care products and slowing growth in diapers and tissues. Currency fluctuations and competition from lower-cost alternatives added pressure. However, its recent acquisition of Kenvue is projected to boost revenue and earnings, with $2.5 billion in cost savings expected within two years. The company also holds a long-standing record as a Dividend King, having increased payouts for 54 consecutive years.

Both firms now trade at yields well above the broader market—Conagra at 7.3% and Kimberly-Clark at 4.3%. Their struggles reflect broader economic pressures on consumer staples, but their strong dividends and potential turnaround strategies have drawn bargain hunters.

The two companies remain under pressure from inflation and shifting consumer habits. Conagra's outlook points to stable but flat growth, while Kimberly-Clark's Kenvue deal could reshape its financial performance. For now, their high yields and discounted valuations make them stand out in a challenging sector.