Companies involved in consumer staples are some of the strongest and most stable companies that one could invest in. They sell products such as beverages, cleaning products, personal care products, food, prescription drugs, and other products that are used on a daily basis by people all over the world. Not only are the products that the companies sell stable sources of business, but the stocks themselves are generally stable. The stocks are usually less volatile than other industries such as technology and financial services, meaning that you have fewer violent swings up and down. Additionally they usually pay safe dividends that grow their payouts over time, especially when the dividends are reinvested.
While consumer staples usually have lower dividend yields, they are typically less risky investments than other forms of equity. Additionally, consumer staples usually make up your core holdings, stocks that you are less likely to sell, meaning that over time the dividends will be able to compound and provide a nice source of income to reinvest, or ultimately live off of during retirement.
Below are 10 consumer staples stocks (that also pay dividends) to consider. Remember that you should always consult with a financial advisor concerning investments.
Procter and Gamble (PG)
Proctor and Gamble is the quintessential consumer staples company. It has massive exposure domestically and abroad. 23 of P&G;’s brands have more than $1 billion in sales annually including Crest toothpaste, Tide detergent, Duracell, and Pampers. The company has manufacturing sites across the US and the world, and is always developing new products for domestic, developed, and emerging markets. The stock currently yields around 3.4% and has increased its dividend 55 years in a row.
When you think of Kellogg’s, you usually think of breakfast food. The company’s portfolio includes cereals such as Frosted Flakes and Raisin Bran, snack bars such as Nutri-Grain and FiberPlus, and other foods including Cheez-It and Eggo Waffles. While the company’s performance is strongly affected by the prices of different grains, the popularity of its brands could allow the company to raise prices if necessary. The company currently has a dividend yield of 3.2%.
Coca Cola (KO)
You likely do not need a description of what this company does. Chances are this global beverage giant has sold you a product sometime in the last week. In the last year the company has had more than $42 billion in sales and the stock currently has a dividend yield of 2.8%.
You may be asking yourself why I have both Coca Cola and Pepsi on the same list. First of all, they are both very strong companies that pay stable dividends. But additionally, Pepsi’s business is different in ways other than the taste of their products. Besides their iconic soft drinks, the company also sells Lay’s potato chips and Gatorade, creating a diverse portfolio of products. The stock currently has a dividend yield of 3.3%.
Johnson and Johnson (JNJ)
While the company has taken a hit to its reputation lately with a string of product recalls, the core products of Johnson and Johnson are still profitable and growing. The company has a diverse mix of prescription drugs, medical devices, and over-the-counter products such as Listerine, Band-Aid, Tylenol and Benadryl. JNJ stock currently has a dividend yield of 3.6%.
Novartis is the second healthcare company on the list of dividend payers. It has a strong business in pharmaceuticals, vaccines, and other products such as Benefiber and Theraflu. This Swiss company currently has a dividend yield of approximately 4%, however it only pays out one dividend per year (albeit much larger than most).
Kimberley-Clark is primarily a paper-based consumer products company. Its brands include Kleenex, Huggies (diapers), Cottonelle, and Viva paper towels. It has a very stable business and currently has a dividend yield of around 4.3%.
B&G; Foods (BGS)
B and G Foods is by far the smallest company on the list, with a market cap of less than $1 billion. But it still has a large portfolio of strong food products including Cream of Wheat and Ortega. The company currently has a yield of 4.9%.
Philip Morris International (PM)
Philip Morris is definitely a controversial pick. It is an international tobacco company (no exposure to the US) with brands such as Marlboro and Virginia Slims. Globally, regulations are generally behind US tobacco regulations, but it is still something to consider. Personally you may also have a problem with the ethics of profiting off of something that harms people (I certainly do and choose not to own the company). If you can see passed the ethics issues though, the stock has a yield of 3.8% and is a serious play on international growth.
Colgate-Palmolive is the final consumer staples stock on the list. Its brands include Colgate, Palmolive, and Softsoap. Like its competitor Procter and Gamble, it has a noteworthy exposure to emerging markets. The company has a dividend yield of around 2.7% and has raised its dividend payout for 47 years in a row.
Consumer staples companies offer a safer and more stable way to invest in the stock market. They have diverse products that are used worldwide by billions of people, most with exposure to emerging markets. They also have strong dividends to reinvest and ultimately serve as a source of income.
Full disclosure: I am currently long Procter and Gamble. I have no intent to initiate new positions in the companies listed above in the next 72 hours. Always consult a financial advisor when it comes to investing.
Leave a Reply