When it comes to defensive stock selection, no sector performs quite like the consumer staples. These companies can be relied on to sell their wares through thick and thin, good times and bad. And very often, it's these same companies that pay investors the best dividends. The following three consumer staple stocks now appear priced to perfection. If it's fundamentals you're after, you won't be disappointed. (For more, see Cyclical Versus Non-Cyclical Stocks.)

IN PICTURES:
Eight Ways To Survive A Market Downturn

Why Staples?
Consumer staples are generally widely followed companies that perform best in the middle-to-end of the economic cycle. They include, but are not limited to, food, beverage, tobacco, alcohol, as well as discount and other household items that are deemed necessities, like toiletries. The consumer staple sector also has the following important characteristics: it has an extremely low correlation to, and experiences less overall volatility than, the overall market.

Eat Up, Clean Up and Wipe Up
Kellogg's
(NYSE:K) is a household name with much to offer investors. With a P/E ratio of 14.50, a dividend yield of 3.11%, and gains of nearly 25% in just the last two months, you've got more than just a bowlful of mush. Kellogg's recently issued $750 million in 7 year debt at a very competitive 4.45% rate, and ratings agency Fitch confirmed them at A- grade. Kellogg's strong debt rating reflects its leading market share and powerful brand position in the cereal and convenience food market.

Unilever (NYSE:UL) is another global corporate giant operating in the food, personal and home care product market. The stock carries a mere 11.44 P/E multiple and pays a healthy 4.90% annual dividend. The stock jumped 38% in just 10 weeks, powered in part by strong earnings in emerging markets and a recently unveiled corporate strategy geared to more fully exploit those markets. Unilever carries a diverse product line that includes everything from Ben & Jerry's ice cream to Dove soap. (For more, see Using Consumer Spending As A Market Indicator.)

Institutional Buyers Indicate Confidence
Kimberly Clark
(NYSE:KMB) is a world supplier of branded health and hygiene products. The company's shares have appreciated almost twenty percent in recent weeks and still sport a friendly 4.69% dividend. The stock sells for a multiple of only 12.79x trailing earnings. Kimberly Clark has a massive institutional following as well. Nearly three quarters of the outstanding shares are owned by professionals - a vastly greater number than say, Unilever, whose institutional interest currently sits at a mere 3%. KMB also recently announced a new, innovative product line called Scott Naturals. Meant to appeal to a growing "green" consciousness, this line of bath tissue, towels, napkins and flushable wipes products promises environmental friendliness without sacrificing quality.

The Wrap
They may not have the pomp or pizzazz of high-flying tech stocks but steady dividends and predictable growth are on offer from the best of the consumer staples. And after the most recent market mayhem, many investors might even prefer this "boring" corner of the investment world. (Read more in our related article A Guide To Consumer Staples.)

Related Articles
  1. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  2. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  3. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  4. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  5. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  6. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
  7. Stock Analysis

    The Safest Stocks You Can Invest in Right Now

    These stocks are likely to hold up better than others in a bear market, but there's a twist.
  8. Investing Basics

    5 Reasons to Expect Lower Stock Returns

    Lower stock returns are likely here to stay for some time. Here are five reasons why.
  9. Investing Basics

    What to Cut From Your Portfolio Right Now

    Owning stocks may shortly become too scary for your portfolio. Here's why, and here are some alternatives.
  10. Personal Finance

    Careers: Equity Research Vs. Investment Banking

    Equity research is sometimes viewed as the unglamorous, lower-paid cousin to investment banking. In this article, we compare the two careers.
RELATED TERMS
  1. The New Deal

    A series of domestic programs designed to help the United States ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!