In the U.S., we spend up to a quarter of our income on consumer staples. What are consumer staples? Things like groceries, toothpaste, toilet paper, laundry soap and pet food—it’s all the stuff you buy without even thinking about it. And that can make consumer staples attractive to investors—particularly those looking to diversify their portfolios.
Here are some more facts about consumer staples:
- Consumer staples stocks are considered “defensive” stocks, as they tend to be less volatile during recessions and market downturns.
- Many consumer staples companies also pay stock dividends.
- Big companies like Johnson & Johnson and Procter & Gamble, and other blue chip companies, dominate the industry.
You’ll recognize many of the companies in the consumer staples sector. They include names like Campbell Soup, Coca-Cola, and Kimberly-Clark.
While these companies may grow more slowly than some companies in the tech sector, they tend to be dependable. For example, in 2018, the consumer staples sector is expected to grow at roughly 11%, about half the rate of the broader S&P 500 index.
Slow growth and mature companies may be a turn-off for some investors, and like all stocks, they do have their risks.
Consumer staples stocks may not be the sexiest, but they could offer investors some advantages. The products and services they produce are almost always in demand, for example, which helps them weather recessions. And many of them pay dividends.