Should Dividend Growth'ers Back The Truck Up For Consumer Stocks?

My readers know that I've been cautious at best and downright negative at worst on the consumer non-durables space over the past several years. Paying 20+ earnings for companies struggling with both their top- and bottom-lines, despite comparatively attractive yields, hasn't been my idea of dividend or total return alpha.
So I was interested to read Ian Bezek's bullish take on the space yesterday.
As Ian pointed out, 2018 has been fairly rough, collectively speaking, for the group. While SPY is about flat for the year so far, Vanguard's Consumer Staples Index ETF (VDC) is down almost double digits in price. Take a look at that ETF's top holdings as of April 23rd below.

Source: Ameritrade ETF profile
I've long opined that "expensive defensive" dividend stocks like the list above would probably not hold up very well if and when a reversal in risk-free yields were to occur. For better or worse, slowing growth and elevating payout ratios have created almost a bond- or utility-like aura around your Procter & Gamble's (PG) of the world since the financial crisis.
Surprisingly enough, PG today sits at about the same level it did about a decade ago. Over the same time period, the S&P 500 has almost doubled.

However, this has not been a homogeneous situation. Some smaller consumer companies, including McCormick (MKC) and Hormel (HRL), which Ian also pointed out, have performed well in excess of market return... Read more