The cosmetics industry is mature, so the top spots don't change often. The big companies have firmly established themselves in consumers' minds. Despite this maturity, there is still income and growth to be had. The sector remains competitive, and the track record of the top companies makes them solid candidates for a portfolio that needs some stability.

We have chosen four cosmetics stocks as our top picks for 2018. They were chosen based on their longevity and the reliability of their dividends. All figures are current as of July 22, 2018. (See also: Cosmetics Industry Disruptors Target Millennials.)

The Estée Lauder Companies Inc. (EL)

Estée Lauder has led the cosmetics space for so long that it is hard to imagine any other company taking over the top spot. The company excels at design and production of new products, as well as marketing. Yearly revenues top $11 billion, and its name brand recognition is superior. The cosmetics giant owns the brands Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and Bumble, Darphin, Smashbox, RODIN and Glamglow, among others. Estée Lauder also has license agreements with Tommy Hilfiger, Donna Karan New York, Michael Kors and Tom Ford.

Estée Lauder's extensive marketing outlets are extraordinary. It distributes its products through department stores, specialty retailers, perfumeries, pharmacies, salons and spas. Both annual and quarterly revenues have been steady, but the company's operating income has shown some dramatic ups and downs over the past four quarters. The stock has had a solid year so far, posting gains of around 12% in the first half of 2018, and its continued role as a cosmetics industry leader suggests the potential for additional growth. (For more, see: How Estée Lauder Lured in Millennials.)

Inter Parfums, Inc. (IPAR)

This company focuses on fragrances. It sells through its European segment and its United States segment. Inter's brands include Balmain, Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Paul Smith, S.T. Dupont, Repetto, Rochas, Van Cleef & Arpels, Abercrombie & Fitch, Agent Provocateur, Anna Sui, bebe, Dunhill, Hollister, French Connection, Gap, Oscar de la Renta and Shanghai Tang.

Its revenue has been relatively steady for the past three quarters, and the dividend of 1.53% appears to be safe. This is probably not a growth play, but it is a steady company that can provide investors with reliable income. Inter Parfums has posted strong gains this year, and the stock is currently trading right up against its all-time high around $57 per share. (See also: Piper Jaffray Starts Coverage on Beauty Companies.)

  • Average Volume: 96,465
  • Market Cap: $1.782 billion
  • P/E Ratio (TTM): 40.36
  • EPS (TTM): $1.41
  • Dividend and Yield: $0.84 (1.53%)

Nu Skin Enterprises, Inc. (NUS)

Nu Skin's specialty is anti-aging products. It also sells nutritional supplements. Some of its products are designed for weight management, and it also offers hair care products. The company has a robust research effort on aging, including both external influences and genetic influences. Products are distributed worldwide through direct sales and distributors – similar to the model of Mary Kay Inc. and Avon Products, Inc. (AVP​) – plus through retail stores and its online outlet.

Revenues and operating income have been dropping slightly for the past four years, but the stock price saw significant growth of approximately 32% in 2017. Nu Skin's winning streak has continued this year, with additional gains of around 9% so far in 2018.  (For more, see: Avon, Nu Skin Struggle with Revenue.)

  • Average Volume: 464,817
  • Market Cap: $4.151 billion
  • P/E Ratio (TTM): 29.99
  • EPS (TTM): $2.49
  • Dividend and Yield: $1.46 (1.85%)

Coty Inc. (COTY)

This beauty products company is a worldwide marketer of fragrances, cosmetics and skin care products. Fragrance brands include Calvin Klein, Marc Jacobs, Davidoff, Chloé, Balenciaga, Beyoncé, Bottega Veneta, Guess?, Katy Perry, Miu Miu and Roberto Cavalli. Coty's marketing outlets include supermarkets, drug stores, pharmacies, perfumeries, department stores, nail salons and duty-free shops.

Revenues have been growing steadily for the past four years. However, unlike the other cosmetics stocks on this list, Coty has struggled this year, seeing its share price decline nearly 30% year to date. While the market appears to be concerned about increasing competition from e-commerce and standalone beauty stores such as Ulta Beauty, Inc. (ULTA), there could be some value in Coty stock after the string of losses. (See also: Coty Lags Q4 Earnings, Sales Beat Estimates.)

  • Average Volume: 5,933,898
  • Market Cap: $10.47 billion
  • P/E Ratio (TTM): N/A
  • EPS (TTM): -$0.39
  • Dividend and Yield: $0.50 (3.53%)

The Bottom Line

The cosmetics sector has some major players that offer stability and regular dividends. The demand for beauty products worldwide is still growing, and innovators in the field tend to dominate. The four companies on our list regularly offer new products and brands that keep them competitive. (For additional reading, check out: Coty Pursues Acquisitions While Avon and Other Beauty Companies Innovate.)

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