When it comes to defensive stock selection, no sector performs quite like the consumer staples. These companies are great because their stock is non-cyclical instead of cyclical, and can be relied on to sell their wares through the 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.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

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.

SEE: Eight Ways To Survive A Market Downturn

Eat Up, Clean Up And Wipe Up
Kellogg's
(NYSE:K) is a household name with much to offer investors. With a forward P/E ratio of 13.3, a dividend yield of 3.50%, and a gain of 6.50% in just the first three months of 2012, Kellogg shows great potential. In addition, Kellogg's strong debt rating reflects its leading market share and powerful brand position in the cereal market.

Unilever (NYSE:UL) is another global corporate giant operating in the food, personal and home care product market. The stock carries a mere 13 forward P/E multiple and pays a healthy 4.10% annual dividend. The stock jumped 16.6% over the last 2 years, 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.

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 are up 8.37% YTD, sports a friendly 3.70% dividend, and has a forward P/E of 14.2 . Kimberly Clark has a massive institutional following as well. Nearly three quarters of the outstanding shares are owned by professionals.

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.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  2. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  3. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  4. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  5. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  6. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  7. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  8. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  9. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  10. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
COMPANIES IN THIS ARTICLE
Trading Center