Investing in Consumer Staples Stocks
In this article, we take a look at the consumer staples industry. Keep reading to find out about investing in consumer staples companies and to see 2 of the best consumer staples stocks to watch in 2024.
Table of Contents
What Are Consumer Staples Stocks?
Consumer staples is the name given to essential goods. In other words, consumer staples are products which you cannot, or will not, live without. Consumer staples stocks, therefore, are the shares of companies which produce and/or sell these items.
Typical examples of consumer staples include food, drinks and hygiene products – but the term also encompasses products such as tobacco and alcohol, things which we don’t necessarily need but which many will continue to buy no matter what.
Investing in Consumer Staples Companies
One of the reasons why people choose to invest in consumer staples is highlighted in the term’s definition. Consumer staples are necessities. People will always buy them, regardless of the economic environment.
Consequently, companies which produce and/or sell consumer staples tend to be able to rely on steady revenue and profits regardless of the prevailing economic climate.
During a period of robust economic growth, this may not be viewed as such an attractive quality as, due to their steady profits, consumer staples stocks don’t tend to experience the kind of gains which investors may be able to achieve elsewhere.
However, during a period of economic instability or a recession, a company which is able to generate steady profits is exactly what investors crave. Consequently, in times of economic turmoil, consumer staples and other defensive stocks tend to perform comparatively well.
Furthermore, many of the best consumer staples stocks are also reliable dividend payers, meaning they can provide investors with an additional source of income.
Best Consumer Staples Stocks to Watch
So, what are the best consumer staples stocks to watch? In the following sections, we will highlight 2 consumer staples dividend stocks.
| Walmart |
| Unilever |
Walmart
In terms of market share, Walmart dominates the US supermarket industry and is the second largest online retailer in the country. It is also the largest company in the world in terms of revenue.
As a supermarket, Walmart sells a wide variety of consumer staples - including food, beverages, hygiene products – but also a number of discretionary goods such as electronics.
Its major presence in the world’s largest economy, ability to adapt to new shopping habits and wide range of products has allowed Walmart to perform robustly through good times and bad. Over the last couple of years, share price has remained resilient in the face of high inflation and rising interest rates.
Walmart is one of the best consumer staples dividend stocks to watch, having hiked its annual distribution every year for more than 50 consecutive years. At the time of writing, Walmart has a dividend yield of 1.1%.
Unilever
Unilever is one of the top UK consumer staples stocks and one of the largest companies on the FTSE 100 in terms of market capitalisation. The UK company owns a number of famous brands which command a high level of brand loyalty including Hellmann’s, Dove and Persil.
Although Unilever has been guilty of underperforming in recent years, it has recently changed leadership as part of a transformation with the aim of turning things around. Interestingly, activist investor Nelson Peltz, who previously helped consumer staples rival Procter & Gamble revamp its business, has been added to the company’s board.
Amongst the measures which Peltz has pushed for, and which Unilever has proved open to, is selling some of Unilever’s slower growing businesses to prioritise higher growth brands. Part of this strategy has included slimming down its portfolio by spinning off its ice cream business, which is expected to take place before the end of 2025.
Like many consumer staples companies, Unilever has a long history of paying dividends, having raised or maintained its annual payout for more than 20 years. At the time of writing, it’s dividend yield is 3.1%.
Consumer Staples ETF
Another option, for investors who want exposure to the consumer staples industry without having to pick individual consumer staples stocks, is to look for an Exchange-Traded Fund (ETF) which focuses on investing in consumer staples companies.
An example of such a consumer staples ETF is the iShares Global Consumer Staples ETF, which tracks the performance of an index composed of consumer staples stocks from around the world.
How to Invest in Consumer Staples Stocks
With an investing account from Admiral Markets, you can buy shares in the 2 consumer staples companies highlighted in this article! Follow these steps in order to start investing in consumer staples:
- Open an Invest.MT5 account.
- Log in to the Dashboard.
- Open the web trading platform.
- Search for a stock and click the symbol to open a price chart.
- Create an order, enter a number of shares and click ‘Buy’ to send the order to market.
Investing with Admiral Markets
With an Invest.MT5 account, you can buy shares in 4,500 companies and more than 200 Exchange-Traded Funds (ETFs) from around the world. Click the banner below to get started:
FAQ
What is the best ETF for consumer staples?
There are a number of consumer staples ETFs which track benchmark indices composed of consumer staples companies. Some examples of these consumer staples ETFs include: the Vanguard Consumer Staples ETF, the iShares Global Consumer Staples ETF and the Consumer Staples Select Sector SPDR Fund ETF.
Is it good to invest in consumer staples?
Thanks to the nature of the products and services which they produce, consumer staples stocks can potentially provide an element of stability to an investment portfolio, as well as the opportunity for dividend payments. However, whether or not they are a good investment will depend on the investor in question and their investing goals.
Do consumer staples do well in recession?
Due to the fact that they produce and/or sell goods which people need regardless of the economic climate, consumer staples companies tend to perform resiliently during recessions.
Other Articles You May Find Interesting:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
