Sonoco Products (NYSE: SON) has emerged as a surprising market outperformer in 2026, delivering strong returns alongside a generous dividend payout.
The packaging company, which produces metal, paper, and plastic packages for consumer and industrial uses, is not to be confused with the similarly named oil and gas firm.
Sonoco’s stock has returned 30% year to date, handily beating the Nasdaq’s 10.3% gain and the S&P 500’s 8.5% return over the same period.
The company also carries a dividend yield of 3.78%, well above the S&P 500 average, making it an attractive option for income-focused investors.
Sonoco has raised its annual dividend for 43 consecutive years, and if it sustains that streak for seven more years, it will earn the coveted Dividend King designation.
The company has paid a dividend for 404 straight quarters, dating back to 1925, underscoring its long and consistent commitment to returning cash to shareholders.
Despite a 2% drop in sales last quarter, earnings rose 26% year over year to $0.68 per share, driven largely by aggressive cost management.
Selling, general, and administrative expenses fell 4% in the latest quarter as part of Sonoco’s Profitability Performance Plan, which targets $32 million in savings this year and $150 million to $200 million over the next three years.
The company is also streamlining its portfolio by divesting lower-performing assets, including ThermoSafe, to sharpen its focus on higher-margin businesses.
Consumer packaging now represents approximately 67% of total sales, up significantly from 42% in 2020, shifting the business toward a less cyclical and more profitable revenue mix.
For fiscal 2026, Sonoco guides for revenue between $7.25 billion and $7.75 billion, roughly in line with the prior year, while cash flow from operations is expected to come in between $700 million and $800 million.
Analysts project only 2% earnings growth in fiscal 2026 but anticipate that figure jumping to 10% in 2027, likely reflecting the benefits of the consumer pivot and the cost savings plan taking fuller effect.
Roughly 50% of analysts rate the stock a buy and 50% rate it a hold, with a median price target of $63 per share implying approximately 12% additional upside from current levels.
Despite the 30% year-to-date surge, Sonoco still trades at just 9 times forward earnings and carries a five-year PEG ratio of 0.20, pointing to significant remaining value for investors.
With a low payout ratio of 38% and strong cash flow, Sonoco appears well positioned to continue rewarding shareholders through both dividend growth and capital appreciation.
