VDC Vanguard Consumer Staples ETF Overview

Look for companies with a low P/E ratio and a high dividend yield. The other side to this is that a company could have a high P/E ratio and still be a viable investment. This is because investors sometimes pay more for a company with premium earnings, as can be seen from some of the most expensive stocks on the market today. A few key consumer staples stocks belong on any investor’s radar. These companies have solid fundamentals, have shown consistent growth, and have a history of paying dividends.

By adding Focus List stocks, there’s a great chance you’ll be getting into companies whose future earnings estimates will be raised, which can lead to price momentum. Brokerage analysts are in charge of determining a company’s growth https://investmentsanalysis.info/ and profitability expectations, or earnings estimates. These analysts work together with company management to evaluate all factors that may affect future earnings, like interest rates, the economy, and sector and industry optimism.

What Are Consumer Staples?

It’s not just the rock solid sales and earnings that show consistency year in and year out thanks to the recession-proof nature of junk food sales. No matter which consumer staple ETF you choose, be sure to do your homework before investing. Read Crude oil cfd the fund’s prospectus and research the individual stocks that make up the fund. By doing so, you’ll be better equipped to make an informed investment decision. Look for a team with a track record of success in running a consumer staples business.

In periods when the economy is doing well, consumer staples stocks may underperform other more dynamic sectors. That said, recent efforts in China to contain the spread of COVID-19 have led the company to reduce its fiscal 2022 guidance. The drop was notable, taking organic sales growth to between 5% and 7%, down from the previous guidance of 10% to 13%.

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The company is the largest producer of soap in the world, but it also makes countless other goods, including Lipton teas and Ben & Jerry’s ice creams. Unilever stands out for its poor environmental record, though it has recently announced plans to drastically reduce its footprint before the end of the decade. 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. Among other achievements, the company pioneered vertical integration by buying out its early bottlers, minting a number of millionaires in the process. Nestle is a Swiss multinational known for—you guessed it—chocolate. The company started as a condensed milk company, and milk chocolate was one of its first products.

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. We use essential products daily, from food, beverages and personal care items to household essentials like cleaning supplies and toiletries.

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In addition, the company reported revenues of $232.5 million for the quarter, up 1.6% year-over-year. Amazingly, the sector’s long-term performance has also been one of the best. The sector has demonstrated a remarkable ability to generate consistently high returns on invested capital, avoiding the mean reversion experienced by many other highly profitable industries. To filter by dividend yield, click the filter icon at the top of the dividend yield icon, as shown above.

Like other consumer staples companies, P&G received a healthy boost from the pandemic. Notably, the organic sales gain was driven by a mixture of higher volume, price increases, and selling more higher-priced items. One of the benefits of buying dividend stocks in various sectors of the stock market is that dividend payments can help offset some of the decline in stock value during an economic downturn. Another benefit is that investors can benefit from the compounding effect of dividends if they invest long-term. When dividends are paid, investors can invest that money in consumer staples dividend stocks to buy more shares and earn a higher total return. The top 7 list was derived from the expected returns of each stock.

Risks of Investing in Consumer Staples Stocks

Kraft Heinz formed with a merger in 2015, so the 15-year annualized total returns are not available.

• Another benefit of these companies is that downturns help improve the company’s valuation.
• 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.
• The drop was notable, taking organic sales growth to between 5% and 7%, down from the previous guidance of 10% to 13%.
• Bob received a bachelor’s degree in Finance from DePaul University and an MBA with a concentration in investments from the University of Notre Dame.
• The Fund seeks to track the performance of a benchmark index that measures the investment return of consumer staples stocks.

However, its other brands include Blow-Pops, Andes mints, Dubble Bubble gum, Razzles, Cry Baby sour candies, and many others. 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. However, Altria has been through a lot in the last 30 years or so and has learned how to operate in the current environment through a focus on margins and shareholder value. The latest GDP report shows economic growth slowing down in the first quarter of this year vs. the fourth quarter of 2022. Specifically, GDP increased 1.1% annually vs. 2.6% in the prior quarter.

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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. While consumer staples are among the safer equities you can buy, there are risks. No company is immune to changing consumer preferences, for example. Consumer staples manufacturers must continue investing in product development and innovation to protect the brand reputations they’ve built. Although there are no substitutes for consumer staples goods, consumers have a lot of options when shopping for the cheapest products.

• Additionally, companies producing these products often have established brand names and loyal customer bases, protecting against the competition.
• The slowdown adds fuel to the argument that the U.S. is headed for recession later this year.
• Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
• Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

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. This company is a classic example of a recession-proof stock, as Americans will do laundry and take showers regardless of the ups and downs in the job market or inflation metrics. Smucker reached an agreement with Post Holdings (POST) to sell off its pet-food brands, including Kibbles ‘n Bits, for $1.2 billion.

Is Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) a Strong ETF Right Now?

Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Consumer staples stocks are a traditional safe haven from uncertainty, which has already proven to be more than abundant over the past 12 months. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed.