Consumer-Focused Companies Soar Toward New Highs
July 26 2019 - 12:06PM
Dow Jones News
By Corrie Driebusch
One of the hottest stock-trading strategies lately is buying
shares of stable consumer companies, a sign that investors are
hedging their bets by picking up shares of firms they believe will
provide returns in a struggling economy.
Over the past three months, consumer-staples companies -- firms
that sell everyday household goods and popular foods and beverages
-- are the second-best performers in the S&P 500, up nearly 5%,
lagging only technology firms. Coca-Cola Co., Procter & Gamble
Co. and Walmart Inc., all of which fall into this category, are
trading at or near all-time highs.
In addition to the consumer-staples sector, other companies that
fall into this defensive-quality bucket include McDonald's Corp.
and Starbucks Corp., some analysts say.
On Friday, McDonald's soared to a record after the burger
giant's sales grew across the world in the latest quarter.
Starbucks' stock also jumped to an all-time high Friday after the
world's largest coffee chain reported late Thursday that its sales
rose in key U.S. and China markets, beating expectations.
This segment of companies, viewed as high-quality while also
being defensive, isn't known for its heady growth like the tech
sector, nor does it typically provide big dividend payouts like
utility companies. But the slow and steady nature of the
consumer-focused businesses tends to be seen as a safe bet if the
U.S. economy teeters, as some worry it might.
The consumer-staples sector boasts a dividend yield of 2.8%, the
highest yield among S&P 500 sectors save the energy sector and
utilities, according to FactSet. That dwarfs the yield on the
benchmark 10-year U.S. Treasury note, which settled Thursday at
2.078%.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
July 26, 2019 11:51 ET (15:51 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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