If you feel your portfolio needs some protection against a volatile stock market, you may want to move out of some of your growth stocks and play defense. Defensive consumer stocks are those that deal with staples. They pay a dividend and tend to be less susceptible to market pullbacks.

The idea here is that by playing it safer you won’t make as much money as you would with growth stocks, but you won’t be as likely to lose money if the market gets choppy. The companies in the consumer defensive category sell products that are always in demand. The stocks on this list were chosen based on the following criteria:

  • Stable to upward revenues for three years
  • Reliable dividend
  • Positive operating income for three years.

Four stocks met these criteria. If the second half of 2017 goes smoothly, these stocks will provide income and stability. If the year has a downturn, these stocks should fare better than consumer staples that are currently in a downtrend, and they should be much safer than growth stocks.

Because each of these stocks pays a dividend and never misses, investors can count on income throughout the year. All figures are current as of July 17, 2017.

1. Kraft Heinz Company

Kraft Heinz (KHC) has been beating analyst expectations for earnings. The company makes its living selling Oscar Mayer, Heinz, Planters, Velveeta, Philadelphia, Lunchables, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, and Jell-O.

KHC is in the process of making $1.3 billion in cost cuts, focusing on efficiency to keep itself competitive in the packaged food business. It already sells in 31 countries, and it is not going away anytime soon.

Currently, the stock is recovering from a sharp drop in June 2017. It seems to have found support at around $82 per share, so this could be a buying opportunity.

The dividend may not grow in 2017. This is the price of safety. Investors will get steady income and some protection from losses.

2. Reynolds American Inc.

Reynolds American (RAI) is a tobacco company that owns the brands Newport, Camel, Pall Mall and Doral, as well as Grizzly and Kodiak snuff.

The stock saw a breakout in late October 2016 and has been rising since then. It pays a dividend every quarter, and has been rewarding investors with growth. Even if the growth does not continue, RAI will be in a position to pay a dividend.

3. Snyder's-Lance Inc.

The per-share price for Synder’s-Lance (LNCE) had a rough April 2017. It has yet to settle into a base, so it could be volatile for the near term. Investors would be wise to wait until the 50-day moving average crosses above the 200-day average before jumping in. Such a move might be confirmation that the stock is entering an upward trend.

The company sells packaged snacks. Apparently, consumer appetite for snacks is not abating, because the company has maintained steady revenues and income for four years. This one is for the steady dividend of just under 2%.

4. Sysco Corporation

Sysco (SYY) is a food company that sells frozen foods, canned foods, dry foods and fresh meat, seafood and dairy. In other words, SYY is not going to run out of customers soon. The demand for its products will continue through the ups and downs of world economies, because these foods are not luxury items.

Sysco pays a dividend and offers some growth if the trend continues. The share price has been riding above the 50-day moving average. The stock had formed a cup and handle pattern, which often leads to a breakout, but the stock broke down in mid-June instead. Wisdom says wait until the stock settles into a new base before buying.

The Bottom Line

You can buy consumer defensive stocks when they dip a little. This will give you a relatively low average purchase price as you build your position. Lately, many of these stocks have fallen more than a little, so get back in cautiously. All four of these stocks are very likely to rebound when they see a pullback. (See also: What Are Defensive Stocks?)

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