Consumer staples sector outlook 2024 Consumer staples stocks

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. The Consumer Staples sector consists of companies that provide goods and services that people use on a daily basis, like food, clothing, or other personal products.

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Nestle operates in nearly 200 countries, employs over 330,000 people and operates over 400 factories. The company is also one of the biggest shareholders of L’Oreal, another company on our list. WMT was founded in Bentonville, Ark., by Sam Walton, who was a pioneer in value retail. While the company is still headquartered in Arkansas, it now operates everywhere in the U.S. and in 24 countries.

Among the best positioned for 2024 may be household products companies, due to sticky pricing, positive trends on sales volumes, and earnings flexibility. 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. To help you find the best consumer staples stocks, Forbes Advisor has profiled the 10 largest companies in this sector by market capitalization. Defensive stocks (like electricity and water) are relatively unaffected by economic volatility. Most people will spend much the same on them regardless of economic pressures.

Distributor Industry

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. 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. A multinational, member-only big box chain, Costco is the fifth largest retailer in the world, according to the National Retail Foundation. The company operates 800 stores worldwide, though stores exist in fewer than 20 countries and almost 70% of its stores are located in the U.S.

L’Oreal is a French company that manufactures a range of personal care products, including cosmetics. The company started in 1909 when a chemist invented a hair dye and has since grown into the world’s largest cosmetics company. That means that the stocks of companies in the sector are relatively volatile, falling in bad economic times and rising fast when conditions get better. Such goods include luxury items, new vehicles, vacations, fast food, furniture, and appliances. Yes, Starbucks is considered a consumer discretionary company and stock.

Find ETFs that align with your values or with social, economic, and technology trends. Another soft drink giant from the south, PepsiCo started in the 1890s in North Carolina. The company went broke during World War I as a result of sugar rationing, but it was later purchased—along with its famous cola recipe—by a holding company.

Investing in consumer staples stocks

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Trends that affect consumer spending power, such as higher or stagnant wages or widespread changes in the prices of essential goods, usually change the prospects for consumer discretionary companies. The consumer discretionary sector is comprised of businesses that sell non-essential goods and services. This elastic demand means that the companies that supply consumer discretionary goods can see their sales drop suddenly in response to widespread decreases in consumers’ incomes or increases in prices. Not surprisingly, their stocks’ share prices usually follow on this pattern.

Some of the companies that fall into the consumer discretionary sector include McDonald’s (MCD), Starbucks (SBUX), La-Z-Boy (LZB), Whirlpool (WHR), Walt Disney (DIS), Carnival Corp. (CCL), Nike (NKE), and Tesla (TSLA). The consumer staples sector has outperformed all but one sector since 1962. According to the S&P Dow Jones Indices, for most of the 10 years ending April 26, 2021, the consumer staples sector returned 8.20% annually. These companies are essential to our daily life and do well even if the economy is waning. Choose from a list of exchange-traded funds or mutual funds selected by 38 5 swedish krona to british pound sterling, convert 38.5 sek in gbp Morgan Stanley Smith Barney LLC.

1. Because of their slow and steady nature, consumer staples stocks can also not only continue to pay dividends through recessionary periods but often continue to increase their payouts.
2. The University of Michigan’s consumer sentiment index is an important gauge of U.S. consumer optimism related to the state of the U.S. economy.
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4. PEP has owned a number of other brands, many of which it sold off in the 1990s, such as restaurant chains Pizza Hut, Taco Bell and KFC, plus the U.S. rights to Russian distiller Stolichnaya.
5. Vanguard, for example, offers VDC, a consumer staples ETF, and a Consumer Staples Index mutual fund.
6. Choose from a list of exchange-traded funds or mutual funds selected by Morgan Stanley Smith Barney LLC.

An added perk is its higher dividend yield than the S&P 500 Index — even during a recession. Consumer staples stocks can be a good option for investors seeking steady growth, solid dividends, and low volatility. Buoyed by the persistent demand of their products, consumer staples companies generate consistent revenues, even in recessionary periods. As a result, consumer staples stocks decline far less during bear markets than stocks in other sectors.

The specialty retail industry includes companies that sell specific categories of goods to consumers, such as apparel, electronics, home improvement, automotive retail, and home furnishings. Examples of diversified consumer services companies include H&R Block (HRB) and Graham Holdings Company (GHC). Graham Holdings is a diversified education and media company with well-known brands such as Kaplan and The Slate Group. The diversified consumer services industry includes companies that provide services to the public ranging from education to home security, legal advice, interior design, and consumer auctions. 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.

In periods when the economy is doing well, consumer staples stocks may underperform other more dynamic sectors. However, spending on goods produced and sold by the consumer staples sector tends to be far less cyclical due to the lessened price elasticity of demand. Price elasticity is an economic concept that describes the change in consumer quantity demand as prices change. The demand for consumer staples goods remains fairly constant regardless of the state of the economy or the cost of the product. Investors tend to incorporate consumer staples as a defensive strategy and often look to the sector for a source of stability during field solution architect market slumps and recessions.

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. The household durables industry manufactures products that are bought infrequently and last for years. Examples include lawn and garden equipment, home and office furnishings, appliances, photographic equipment, and sporting goods.