Best Consumer Staples Stocks of 2025
Types of Consumer Staples Stocks
Each stock market sector can be broken down into several industries and sub-sectors. The consumer staples sector is generally segmented into the following sub-sectors:
- Retail. These companies operate store chains, wholesale operations and e-commerce sites—basically any place where consumer staples products are sold.
- Food and beverage. Food staples include companies that make cereals, snacks and other dry goods. Beverages can include alcohol but are more often colas and energy drinks.
- Household products. Furniture, decor and cleaning products are all included in this category.
- Personal products. These include cosmetics and personal hygiene products, ranging from perfume and deodorant to mouthwash and toothpaste.
- Tobacco. This is a controversial member of the consumer staples family, given changing public attitudes toward smoking. But the tobacco subsector still represents big business for those companies that manufacture and sell cigarettes and related products.
Advantages of Investing in Consumer Staples Stocks
Good performance under any market conditions. People buy staples in boom times and in bust times, which makes consumer staples stocks good performers no matter what’s happening in the broader economy. That’s why they’re often considered defensive safe havens during a recession.
Strong dividend income. Consumer staples stocks tend to pay solid dividends and keep paying them over the long term. In fact, they are well represented among the Dividend Aristocrats—firms that have increased their dividends annually for at least 25 consecutive years.
Stability and longevity. The largest consumer staples companies have been in business for decades, some for even more than a century. Since they sell products that are always in demand, consumer staples stocks sustain long-term brand value—and that translates into long-term stock value for investors.
Risks of Investing in Consumer Staples Stocks
Low-margin, slow-growth companies. The profit margins on consumer staples products are razor thin, providing stocks in the sector with very modest opportunities for growth. In periods when the economy is doing well, consumer staples stocks may underperform other more dynamic sectors.
Some brands are vulnerable to disruption. Certain segments of the consumer discretionary sector, especially retailers, are ripe targets for disruption by new e-commerce competitors. Moreover, growing online sales dilutes the power of well-known consumer staples brands.
How to Buy Consumer Discretionary Stocks
Investors can buy consumer discretionary stocks using a standard taxable brokerage account or a tax-advantaged individual retirement account (IRA). If you’re new to investing, or you’d like to change up your current investing accounts, be sure to check out Forbes Advisor’s list of the best online brokerages and the best investment apps.
When buying individual stocks, it’s imperative to do due diligence and research the consumer discretionary stocks you’re interested in. Individual stock picking can be a very risky way of investing, and that means you should pursue this strategy with your eyes wide open.
Read More: How To Buy Stocks
Financial advisors would recommend that non-professional investors take a diversified approach. Rather than buying individual stocks, experts suggest choosing a well-diversified consumer discretionary index fund or exchange-traded fund (ETF). Use the fund screener tools available on your brokerage platform to find the best options.
The author(s) held no positions in the securities discussed in the post at the original time of publication.
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