Index funds are an alternative to an ETF for passively investing in the consumer staples sector. The difference between an ETF and index funds is that investors do not own the assets an ETF tracks but instead own part of the ETF itself. With index funds, however, it’s similar to buying a basket of stocks of many different companies.
If you’re worried about big-picture economic trends, then consider the fact that grocery shoppers will continue to load up on these staples even if they cut back on travel or eating out. What’s more, KHC stock offers a yield that’s more than twice that of the S&P 500. As for its performance on the price chart, Kraft Heinz is up more than 9% in the last 12 months, even as most stocks in the S&P 500 have lost ground in the same period. Discount retailer Dollar General (DG, $227.82) is a nationwide chain that offers everything from cleaning products to packaged food to over-the-counter medicines to holiday items.
Consumer staples are considered to be non-cyclical, meaning that they are always in demand, year-round, no matter how well the economy is—or is not—performing. Also, people tend to demand consumer staples at a relatively constant level, regardless of their price. In addition, Hershey manufactures pantry items like baking ingredients, toppings, and beverages; and gum and mint refreshment products.
Consumer Staples ETFs
Additionally, companies producing these products often have established brand names and loyal customer bases, protecting against the competition. On the other hand, the growth potential of consumer staple companies may slow down and be vulnerable to changes in consumer preferences or regulatory changes. Investing in the consumer staples sector can be a good idea for long-term investors looking for more stable investments to retain their top natural gas stocks money and fight against inflation. However, these stocks also show limited growth potential, as they tend to already be established in the sector. Always consult an investing expert versed in your unique financial situation before making major investing decisions. The annual dividend rate increase over the 20-year period ended in 2015 is 8%, according to Dividend.com, though as of 2018, the sector as a whole was yielding 2.01%.
- We have, therefore, highlighted three inflation-proof consumer staples stocks that astute investors should keep a tab on.
- Another benefit is that investors can benefit from the compounding effect of dividends if they invest long-term.
- In contrast, the S&P 500 information technology sector has dropped 13%.
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- Estimates are for CELH revenue to double in its current fiscal year, and then grow another 50% in fiscal 2023, as well.
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As such, they may not appeal to investors who seek rapid growth, or who are willing to take on a higher degree of risk for higher potential returns. M. Smucker (SJM, $149.94) is also the company behind Jif peanut butter, Folgers coffee, Carnation dairy products, and others. These are staples of any kitchen, and provide a lot of reliability to sales. Tobacco products giant Altria Group (MO, $48.07) is the company behind Marlboro cigarettes, Black & Mild cigars, and smokeless tobacco products like Copenhagen and Skoal. Founded in 1822, this is one of the oldest and most respected tobacco companies in the world.
Types of Companies in the Consumer Staples Sector
In the past five-year period, MDLZ has increased its dividend six times, and its payout has advanced by 10%. If you’re looking to invest in consumer staple stocks, one way to do so is through consumer staple ETFs. Consumer staple ETFs offer investors exposure to a basket of consumer staple stocks, which can provide diversification and reduce risk. Two key disadvantages of consumer staples stocks include slower growth and changing consumer preferences. Investing in consumer staple stocks may provide diversification benefits to your portfolio. Investing in various consumer staple companies can diversify your portfolio and potentially reduce risk.
#45 – New York Times
P&G is currently developing innovative products, including the nontoxic insect repellent Zevo. In 2019, it released a line of plant-based cleaning products called Home Made Simple. After streamlining its business by selling off non-core brands, restructuring, and cutting costs, P&G’s position is as strong as ever.
Investing in Leisure Funds
Price elasticity is an economic concept that describes the change in consumer quantity demand as prices change. The demand for consumer staples goods remains fairly constant regardless of the state of the economy or the cost of the product. Inflationary pressure remains stubbornly high in the United States lately, thanks to a rise in fuel prices.
Stocks
Further, consumer staples are important for portfolio diversification. Also, because these stocks tend to perform in a way counter to the consumer discretionary sector in market recessions, they can help bring balance to a portfolio. Because these stocks tend to perform in a counter way to consumer discretionary stocks in market recessions, they can help bring high low indicator mt4 balance to a portfolio. Index funds that track the consumer staples sector can expose investors to a defensive sector while still allowing them to benefit from the overall market growth. These funds can be a good choice for investors who are looking for stability and income. There are a few things to consider when choosing a consumer staples stock ETF.
That makes the competition among suppliers very challenging in an environment in which commodity prices are rising. To compete on price, consumer staples producers must be able to keep their costs down by adopting new technologies and processes, or they must differentiate by introducing innovative products. And, with iconic global brands such as Dove, Ben & Jerry’s, Knorr, and Hellmann’s, the company has a strong brand portfolio to lean on as it works to improve its growth profile. Long-term investors can happily collect the generous yield while waiting for Unilever’s business performance to improve. You might still have a few questions about this vital stock market sector, beyond “What is consumer staples?
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… day trading goals As a mainstay of cupboards and medicine cabinets around the world, PG provides a steady revenue stream and reliable dividend, as a result. Specifically, P&G has been paying a dividend for 132 consecutive years since its incorporation in 1890, and it has increased its dividend for 66 years straight.
Consumer staples refers to companies that create products considered essential by consumers. With that in mind, here are nine of the best consumer staples stocks to buy now. All have something different to offer, and many also pay generous dividends on top of the potential for share appreciation. Consumer staples companies may not have the highest earnings growth or year-over-year revenue growth because these stocks tend to be large, mature companies.