The 9 Best Consumer Staples Stocks to Buy
Your Auto Restock is personal to you, and you may not assign or transfer your Auto Restock subscriptions, or any of its benefits, to any third party without Staples’ authorization. If any problems arise with your Auto Restock account, you will be notified through your email address provided with your Auto Restock subscription. If continuing problems arise, your Auto Restock order will be canceled and no additional Auto Restock orders will be shipped until the problem has been resolved. Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation.
- Even though the consumer staples sector will likely always be around, they face unique challenges today.
- There’s more upside as Costco expands its store footprint domestically and abroad.
- Unilever is a consumer goods multinational headquartered in London.
- The household and personal care company is almost 200 years old.
Consumer goods are goods that people cannot or do not want to cut back on, regardless of the state of the economy. This is because companies have to pay more for their inputs but may not be able to pass these higher costs on to consumers. In addition, inflation can affect consumer goods stocks in yet another way. When inflation is high, consumers may cut back on spending, which leads to lower sales for businesses in the sector. Thus, firms in this industry can benefit from higher product prices because consumers still have to buy these goods.
Real World Example of Consumer Staples
On the other hand, manufacturers and retailers can be severely impacted by rising input and labor costs. But it’s also worth noting that shares are up about 42% in the last 12 months, compared with a nearly 9% decline for the broader S&P 500. Regardless of the reason, the performance of Tootsie Roll lately makes it stand out among consumer staples stocks. Procter & Gamble is best known for its marquee brands such as Tide, Gillette, and Crest. The household and personal care company is almost 200 years old.
Today, the firm has expanded to produce a gigantic range of different foods and beverages. Comprising nearly 70% of the nation’s gross national product (GNP), consumer spending holds a lot of sway over the economy. Economic growth and decline are typically led by consumer spending, which is cyclical. Cyclical means there are ebbs and flows, or times when the consumer spends more and periods when they have more conservative spending habits. Another option for investors looking at the consumer staples space is Hormel Foods, which is not getting a lot of love on Wall Street these days. It has also proved its worth to dividend investors many times over, given the 61 consecutive years of annual payout increases it has put up.
This category includes things like foods and beverages, household goods, and hygiene products as well as alcohol and tobacco. These goods are those products that people are unable—or unwilling—to cut out of their budgets regardless of their financial situation. The Vanguard Consumer Staples Index Fund (VCSAX) is one of the largest and most popular index funds tracking the consumer staples sector. This fund invests in a wide range of companies, including food and beverage companies, household products companies, and retailers. In addition, consumer staples stocks have benefited from several tailwinds in recent years. The aging of the population has led to increased demand for healthcare products and services.
The amount of each Auto Restock order will be billed to the credit card you authorize for Auto Restock purchases, and your card will be billed on the day your order is shipped. Finder monitors and updates our site to ensure that what we’re sharing is clear, honest and current. Our information is based on independent research and may differ from what you see from a financial institution or service provider. When comparing offers or services, verify relevant information with the institution or provider’s site. Since then, KO has grown into a behemoth in the beverage industry and has spurred massive growth in the Atlanta region by investing incredible sums back into the community.
S&P Futures
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. Consumer staples are the basic goods that people buy to support their everyday the pivot point lives. Companies in this industry manufacture, distribute and sell products like food, beverages and personal hygiene products, which are typically less sensitive to economic cycles. Investors also love Coca-Cola’s 3.1% dividend yield, which generates $1.84 per share in annual income.
Finally, although consumer staples stocks hold up well in recessionary periods, they tend to lag the broader market during boom times. According to data from FactSet, the consumer staples sector had the highest percentages of companies that cited “inflation” on their Q4 earnings calls during this period. This suggests that inflation is a key concern for many consumer staples companies this year. 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.
How to invest in consumer staples
Colgate-Palmolive produces and sells oral care, personal care, home care and pet nutrition products worldwide. The brand portfolio includes Colgate, Irish Spring, Palmolive, Ajax, Fabuloso and Hill’s Science Diet. 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.
MANAGED PORTFOLIOS
They include daily essentials such as food and beverages, personal care products, household and home care products such as paper goods, and alcohol, tobacco, and cosmetics. More importantly, the consumer staples sector has outperformed the S&P 500 during the last three recessionary periods—or periods of negative growth in the gross domestic product (GDP). Due to their low volatility, consumer staples stocks are considered to play a key https://traderoom.info/ role in defensive strategies. On the positive side, the business rationalizations position FLO for higher margins in its food service segment going forward. The company is also seeing positive trends in branded retail sales and the effectiveness of pricing actions to offset cost inflation. Further, FLO is innovating with new products like Nature’s Own Keto Loaf and Dave’s Killer Bread to ensure growth and market share going forward.
Its edgy flavors include apple jack’d, inferno punch, and strawberry dragon fruit. Well-known companies include Altria Group (Marlboro cigarettes) and Diageo (Johnnie Walker and other liquor brands). Consumer staples companies have an excellent ability to withstand recessions, increase their dividends, and post consistent, incremental growth. All of those characteristics make them good choices for investors looking for reliable, income-producing stocks.
Among other achievements, the company pioneered vertical integration by buying out its early bottlers, minting a number of millionaires in the process. Walmart is the world’s largest retailer, the world’s largest company by revenue and the largest employer, with over 2.2 million employees as of 2020. Worldwide, Walmart gets more than 260 million customer visits each year. For those who prefer to avoid crowds, there’s the members-only Sam’s Club and Walmart+ subscription delivery options as well. In the third quarter ended on October 7, 2023, FLO reported 3.5% sales growth to $1.19 billion.
Inflation has pressured these companies for the past 2 years, with some brand-name companies losing market share to generic (also known as private-label) alternatives. In a bid to grow sales volume and market share—and responding to input costs that eased in the past year—some companies slowed their price increases in 2023 and offered more discounts. But this led to decelerating revenue growth in the sector in 2023, which weighed on the stocks even as companies delivered better-than-feared earnings. Higher interest rates also lured many investors toward fixed income and away from dividend-paying stocks. Since the demand for consumer staples doesn’t slow even in a weak economy, the sector is noncyclical.