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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. As inflation soars, rising input costs – due to supply chain issues and increased raw material costs – could weigh on the consumer staples sector. This is compounded by many consumer staples companies facing higher freight and logistics costs as well.
- But if you lost your job or if the economy was declining, you might reduce or eliminate these items from your budget.
- As the VDC aims to track the MSCI U.S. Investable Market Consumer Staples 25/50 Index, you’ll notice that many of the top companies included in the index also make up the fund.
- However, no investment is ideal for everyone, so be sure to consult with a financial professional before making any major investing decisions.
- As an example, Bell Canada (BCE)—the largest Canadian telecommunications company—was the 10th largest company in the S&P/TSX Composite, with a weight of 2.3%, as of June 28, 2019 (see Exhibit 1).
That speaks to the company’s business visibility and operating performance. Mondelez International makes and sells snacks and beverages to supermarkets, gas stations, drug stores, club stores and other retailers in the U.S. and abroad. Brand names include Oreo, Clif Bar, Tate’s Bake Shop, Ritz and Toblerone. In the quarter ended on September 29, 2023, Coca-cola reported net revenue growth of 8% to $12 billion. PG has leading market share in several important categories, including diapers and laundry detergent.
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The company is poised for continued outperformance, thanks to an improving gross margin and investments in fast-growing categories. Sports hydration, energy drinks and ready-to-drink coffee should be growth drivers for KDP going forward, both internationally and abroad. In the third quarter, KDP reported year-over-year adjusted sales growth of 4.1% fx choice review to $3.81 billion. KDP sells Keurig-branded coffee makers and related products, packaged beverages and beverage concentrates in the U.S. and abroad. Schweppes, Hawaiian Punch, Yoohoo, Snapple and 7 Up are some of the company’s ready-to-drink brands. KDP also makes K-pods under the brand names Green Mountain, Swiss Miss, Donut Shop Coffee and McCafe.
How is the consumer staples sector performing?
The company used to make snacks and beverages under the Pringles brand, before selling that division to Kellogg. As stocks rise in price, dividend yields will fall if the size of the dividend does not increase as well. Conversely, if stocks fall in price and if the dividend payout does not change, then the dividend yield increases. Although there are no substitutes for consumer staples goods, consumers have a lot of options when shopping for the cheapest products. That makes the competition among suppliers very challenging in an environment where commodity prices are rising.
The top consumer staple stocks within the sector are issued by companies that produce and sell products that are considered essential and in demand regardless of economic conditions. These companies tend to have stable and predictable earnings because demand for their products is relatively constant, regardless of economic conditions. This means they usually show less volatility, which can be ideal for long-term investors. Investing in the consumer staples sector can provide you with some stability for your portfolio but come with drawbacks.
The consumer staples sector is a varied micro-economy that covers a diverse range of companies. While this sector might appeal to investors due to consistent demand, evolving consumer preferences are key in determining which companies will thrive and which are not viable for long-term holds. As an investor, you may want to focus on consumer staples offering enhanced ESG guidance or a plan for future sustainability — two of the top consumer demands in this sector. Researching the consumer staples sector requires ongoing investigation and a long-term eye toward investments.
#40 – US Foods
Consumer staple ETFs offer investors exposure to a basket of consumer staple stocks, which can provide diversification and reduce risk. No matter if you decide to invest in a consumer staples index ETF or mutual fund, it’s a good idea to answer any lingering questions you may have. The following are some of the most common questions that investors have about consumer staples funds. This means active trading fees can eat away at your returns compared with an index fund that requires minimal maintenance or effort from investors.
How many people will take these drugs and what their effect on sales will be is not yet known. Packaged foods and soda companies may be the most at risk, whereas household products companies and retailers may be less exposed. Many dividend aristocrats – companies that have increased their dividends each year for at least 25 consecutive years – are part of the consumer staples sector.
This is especially important for investors looking to invest in companies producing alcohol or nicotine products, which have been at the forefront of changing regulations. If your choose to invest in these sectors, monitor your investments closely to determine what impact regulation changes will have on your portfolio stability. The consumer staples sector divides into multiple sub-sectors depending on the products the company produces. Here https://forex-review.net/ are some of the largest subdivisions of the consumer sector and some of the major players in each industry. An exchange-traded fund (or ETF) is a collection of stocks that trade together as a single unit, usually to mimic the overall performance of a particular index or consumer sector. Some examples of ETFs geared toward consumer staples include the Invesco DWA Consumer Staples Momentum ETF and the Vanguard Consumer Staples Index Fund ETF.
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You can also invest in an ETF that tracks the performance of international consumer goods, including the Global X MSCI China Consumer Staples ETF. 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. Lingering tough economic conditions may moderate as the year progresses.
You’ll want to ensure the fund invests in a diversified mix of consumer staples stocks so you’re not too exposed to any company or sector. Past performance is no guarantee of future results, but it can give you an idea of how the fund has performed in different market conditions. The consumer staples sector may be just the ticket if you’re seeking safe harbors while navigating today’s tumultuous markets.
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. These include makers of beauty and personal hygiene products such as Estee Lauder and Procter & Gamble. Consumer staples stocks tend to pay solid dividends and keep paying them over the long term. In fact, they are well represented among the Dividend Aristocrats—firms that have increased their dividends annually for at least 25 consecutive years. 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.
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Among the best positioned for 2024 may be household products companies, due to sticky pricing, positive trends on sales volumes, and earnings flexibility. Prefer to invest in the consumer staples sector via a ready-made portfolio? Syfe’s Core portfolios hold the XLP ETF as part of their diversified holdings. With Core portfolios, you can start investing from any amount and dollar cost average effectively every month.
Start by making a list of the companies that operate in the consumer staples sector or viewing a pre-compiled list like this one by MarketBeat. Look for the companies that produce and distribute essential consumer goods that you believe will be continued staples. When buying individual stocks, it’s imperative to do due diligence and research the consumer discretionary stocks you’re interested in. Individual stock picking can be a very risky way of investing, and that means you should pursue this strategy with your eyes wide open.
