2 High-Yield Consumer Staples Stocks Ready to Deliver Big Returns

Key Points

• Total returns in these consumer stapes stocks will run in the high double-digits over the next eighteen to twenty-four months.
• CQ4 2024 results align with the outlook for post-COVID, end-market normalization, and resumption of long-term growth trends.
• Analysts marked a bottom for these markets and indicate a minimum mid-single-digit stock price advance this year. 

Tyson Foods NYSE: TSN and Clorox Company NYSE: CLX are two high-yielding consumer staples stocks on track for robust total returns this year and over the coming few. Trading near long-term lows and the low ends of trading ranges, these stocks are near historically low valuations and pay similarly high yields above 3% in early 2025. The value-to-yield ratio is attractive enough, but today's outlook for share price rebound and total returns is the story. Total returns are the net amount investors gain, including dividend distribution and share price increases, which could count in the high double-digits by the end of 2026.

The reason is simple. These stocks are high-yielding values and blue-chip companies positioning for renewed, long-term success. While post-pandemic normalization has impacted their businesses over the past two years, normalization was completed in 2024, and sustained growth is forecast. In both cases, divestiture and acquisitions are also in play, improving margin, earnings quality, cash flow, and the capital return outlook. 

Tyson Foods and Clorox CQ4 Results Highlight Improving Earnings Quality

Tyson Foods and Clorox's CQ4 2024 results align with consumer staple industry trends, including strength across many categories and price points, outperformance, and broader margins. While Clorox’s business remained in contraction, its end markets are normalizing, and growth is forecast for 2025. On the other hand, Tyson grew its business by 2.3%, with notable strengths in the primary beef, pork, and chicken segments. 

Margin news is good across the board. Each produced margin strength tied to market conditions and improved operational efficiency, leading to better-than-expected earnings. The critical takeaway is that earnings and cash flow are sufficient to maintain healthy financial positions while paying dividends today, and the guidance is for improvement. 

Both increased their guidance relative to prior forecasts, setting the bar above consensus estimates. Tyson forecasts flat-to-slightly higher revenue in 2025, 3% to 5% organic for Clorox, with earnings growing slightly faster. Clorox is forecasting its gross margin to expand by 125 to 150 basis points, while Tyson anticipates a 15% increase in adjusted operating margin at the midpoint. 

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Analysts Mark the Bottom for Consumer Staples Like Tyson and Clorox

The analysts' responses to the CQ4 earnings releases are mixed, including some price target increases and decreases, but are otherwise bullish for the market. The consensus sentiment reported by MarketBeat is holding firm, and the consensus price targets are rising. Clorox is still pegged at Reduce, but a shift is noticeable in the data; several upgrades have been issued since mid-2024, suggesting this stock is also a Hold, potentially a Buy. Regarding the stock price targets, neither has increased significantly since last year but rose incrementally for the 12 preceding the reports. Consensus targets assume mid-single-digit increases from the post-release price points with the potential for a move into the high-end ranges. 

Technical action is iffy. Following the guidance updates, the markets are pulling back and may revert to lower prices before rebounding. The opportunity is to build a position in these stocks while they trend at low levels, collect dividends, and create leverage for when the rebound begins. The critical targets for Tyson are near $54.50 and $51.50, and for Clorox, near $140 and $135, which are also attractive entry points for investors. 

Among the risks are the institutions. The institutions bought these stocks in 2024 but reverted to selling at the end of the year. The activity in January 2025 was bearish, with the selling dollar volume significantly more significant than the buying dollar volume, creating a headwind for the market.