Investing should be dynamic, but only up to a point. The foundation for every portfolio should include some stocks that are your “steady Eddie's." The ones you don't have to closely watch because you know they will provide you with a dependable total return in bull or bear markets.
One sector where investors can find many of these stocks is the consumer staples sector. These are defined as the stocks of companies that manufacture products and services that are essential to our daily lives. This gives these companies two distinct advantages. The first is consistent demand and the second is pricing power.
You may love Apple Inc. (NASDAQ: AAPL) stock and its products and services. But an iPhone or Apple watch is not an essential item. Many consumers, even more affluent consumers, will cut back on these discretionary purchases in tough times. Contrast that with a company like The Procter & Gamble Company (NYSE: PG) which makes products that consumers need, and use, every day.
This isn't to say that Apple can't be a forever stock. But consumer staples titans like PG are the type of stocks that should also be part of the base of your portfolio. With that in mind, here are seven consumer staples stocks that you can buy today and hold for a lifetime.
Quick Links
- Procter & Gamble
- Coca-Cola
- PepsiCo
- Unilever
- General Mills
- Kraft Heinz
- Archer-Daniels-Midland
#1 - Procter & Gamble (NYSE:PG)
The Procter & Gamble Company (NYSE: PG) is a logical choice to include as the first stock on this list of consumer staples stocks to buy. The company is known for iconic brands such as Gillette, Vicks, Tide, Downy, and Pampers.
Shareholders have been treated to stock price appreciation of over 81% in the last five years. And when you include the company’s dividend, the total return is even higher. Speaking of that dividend, Procter & Gamble is a Dividend King that has increased its dividend for 67 consecutive years. The dividend yield as of March 2023 is 2.53% and the annual payout per share is $3.65.
Analysts tracked by MarketBeat give PG stock a Moderate Buy rating with a consensus price target of 155.27%. That's 7.3% higher than the current price. That’s supported by expectations that revenue and earnings will both increase at a single-digit rate over the next five years
About Procter & Gamble
The Procter & Gamble Company engages in the provision of branded consumer packaged goods worldwide. The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands; and antiperspirants and deodorants, personal cleansing, and skin care products under the Olay, Old Spice, Safeguard, Secret, SK-II, and Native brands.
Read More - Current Price
- $168.06
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 16 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $180.45 (7.4% Upside)
#2 - Coca-Cola (NYSE:KO)
When it comes to consumer staples stocks, it’s hard to not include The Coca-Cola Company (NYSE: KO). The stock is well known as a favorite of Warren Buffett, and when you consider Buffett’s desire to own “forever stocks” it’s logical that you should include it as well.
Coke has many impressive attributes, but when you put in context that the company is still a beverage company, the company’s history of reinventing itself while staying true to its legacy brand is truly impressive.
Over the last five years, the KO stock price has climbed 38%. But some critics may point out that the stock is selling at basically the same price it did before the pandemic. Still, Coke has one of the strongest profit margins in the industry. And the 38% share price appreciation doesn’t include the company’s dividend. Coke is another Dividend King and has increased its dividend for 62 consecutive years.
About Coca-Cola
The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores.
Read More - Current Price
- $62.55
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $72.50 (15.9% Upside)
#3 - PepsiCo (NASDAQ:PEP)
The next consumer staple stock on this list is PepsiCo Inc. (NASDAQ: PEP). And this is one time when you don't need to think about Coca-Cola and PepsiCo Inc. as an either-or proposition. Many investors own both and are profitable for it.
The reason why Pepsi can coexist alongside Coke in a portfolio is because PepsiCo is not a pure-play beverage company. It has its snack foods division under the Frito-Lay's brand name which includes many iconic brands such as Doritos, Tostitos, and Quaker Foods.
And that’s reflected in the stock price’s performance. PEP stock is up 61% in the last five years and is up approximately 20% from its pre-pandemic level. Analysts currently have a Hold rating on PEP stock with a price target that would have the stock increasing just 4%. But the company is another Dividend King. Pepsi has increased its dividend for 51 consecutive years. The yield is currently at 2.61% and has an annual payout of $4.60 per share.
About PepsiCo
PepsiCo, Inc engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region.
Read More - Current Price
- $152.79
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $184.31 (20.6% Upside)
#4 - Unilever (NYSE:UL)
Another definition of consumer staples stocks is that they are defensive stocks. And Unilever Plc (NYSE: UL) fits this description well. Unilever is the company behind such popular brand names as Axe, Dove, and even Ben & Jerry’s.
The stock is up about 15% in the 12 months ending in March 2023. That's an improvement over the decline of about 10% that the stock has delivered over the last five years. But as of this writing, UL stock is basically where it was when the pandemic began. And that’s been a little disappointing for investors.
One reason for this may be that the stock only has about 10% institutional ownership. That means the retail investor is doing the heavy lifting. But Unilever has an attractive profit margin and is projected to deliver decent growth over the next five years. Plus, with a P/E ratio of just 15x, the stock is not only cheap compared to its sector, but to the broader market as well.
About Unilever
Unilever PLC operates as a fast-moving consumer goods company in the Asia Pacific, Africa, the Americas, and Europe. It operates through five segments: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. The Beauty & Wellbeing segment engages in the sale of hair care products, such as shampoo, conditioner, and styling; skin care products including face, hand, and body moisturizer; and prestige beauty and health & wellbeing products consist of the vitamins, minerals, and supplements.
Read More - Current Price
- $57.16
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 1 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $61.75 (8.0% Upside)
#5 - General Mills (NYSE:GIS)
One attribute that investors often look for in consumer staples stocks is consistent performance. And General Mills, Inc. (NYSE: GIS) delivers that in many ways that should matter to investors. One area that should get the attention of every investor is the company’s consistent earnings.
In the past five years, General Mills has averaged earnings growth of approximately 5%. At a time when the economy is clearly losing steam, analysts are forecasting earnings growth of over 6%. That should continue to boost the GIS stock price which has already climbed 77% in the last five years. And although General Mills doesn’t have a consistent history of increasing its dividend, it does have a long history of paying dividends. And with the company’s balance sheet, investors relying on that dividend won’t be disappointed.
Analysts have a Hold rating on General Mills stock, but if the company delivers on robust earnings expectations, the stock could easily outperform. One reason is that institutions hold over 70% of GIS stock and buying volume significantly increased in the last quarter.
About General Mills
General Mills, Inc manufactures and markets branded consumer foods worldwide. The company operates through four segments: North America Retail; International; Pet; and North America Foodservice. It offers grain, ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, bakery flour, frozen pizza and pizza snacks, snack bars, fruit and savory snacks, ice cream and frozen desserts, unbaked and fully baked frozen dough products, frozen hot snacks, ethnic meals, side dish mixes, frozen breakfast and entrees, nutrition bars, and frozen and shelf-stable vegetables.
Read More - Current Price
- $63.61
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 12 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $71.56 (12.5% Upside)
#6 - Kraft Heinz (NASDAQ:KHC)
The Kraft Heinz Company (NASDAQ: KHC) is an example of a company that benefited during the pandemic and hasn’t looked back. The stock is up an impressive 69% since March 2020. That offsets the broader loss that KHC stock has suffered in the past five years.
Kraft Heinz has been in the middle of a turnaround that is now starting to come to fruition. The company has entered a period marked by the company stacking up quarter after quarter of revenue and earnings beats.
And while some concern still exists about the company’s debt, especially any debt that will have to be refinanced in a higher interest rate environment, the company’s debt-to-equity ratio remains in-line with the sector average.
Analysts tracked by MarketBeat give the stock a Hold rating with an expectation that the stock price may increase by 14% in the next 12 to 18 months. That would be consistent with the high single-digit growth in both revenue and earnings that analysts are forecasting.
About Kraft Heinz
The Kraft Heinz Company, together with its subsidiaries, manufactures and markets food and beverage products in North America and internationally. Its products include condiments and sauces, cheese and dairy products, meals, meats, refreshment beverages, coffee, and other grocery products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Maxwell House, Kool-Aid, Jell-O, Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie's, Pudliszki, and Plasmon brands.
Read More - Current Price
- $30.52
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $36.55 (19.7% Upside)
#7 - Archer-Daniels-Midland (NYSE:ADM)
Last on this list of consumer staples stocks you can buy and hold forever is the Archer-Daniels-Midland Company (NYSE: ADM). The company is engaged in the area of agricultural commodities. It may sound overly simplistic, but we’ll always need food; therefore, we’ll always need companies that provide companies with the raw ingredients.
ADM stock has rewarded shareholders with a gain of 73% in the last five years. And that includes last year when the stock dropped 15.6%. The simple fact that the stock has been a steady performer when dealing with a volatile sector like commodities is a testament to the company’s staying power.
And so is its dividend. Archer-Daniels-Midland is the fourth Dividend King on this list. The company has increased its dividend in each of the last 51 years. The current dividend yield is 2.40% that is in line with the S&P 500 average.
About Archer-Daniels-Midland
Archer-Daniels-Midland Company engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition.
Read More - Current Price
- $50.49
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 14 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $60.62 (20.1% Upside)
One attribute that all these companies share is a reliable dividend. In many cases, that dividend is growing as well. This provides a reliable source of cash that you can use as supplemental income, or to reinvest and let compound growth do its thing.
In fact, many of these companies will be on the list of Dividend Challengers, Dividend Aristocrats or Dividend Kings. This means that they've increased their dividend for at least 10, 25, or 50 consecutive years respectively. Only companies with rock-solid balance sheets can pull off that feat. And that's another reason why they can be a part of your portfolio.
If you'd prefer not to pick your own stocks, but still want exposure to this sector, there are many exchange-traded funds (ETFs) to choose from. Consumer staples index funds will try to replicate the performance of the sector in general. But keep in mind that when it comes to a fund, you'll be taking the good with the not-so-good.
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