Why I love boring stocks?

 


Hello folks!

Hope all are doing ok! Seems like pandemic thing is bit under control but still a big danger to resume regular activities.

In this post I like to discuss why a good chunk of my portfolio is invested in consumer staple stocks/ETFs (some call them Boring!). They don’t create buzz in media like Netflix, Tesla or Amazon stocks make๐Ÿ˜Š This sector mostly covers companies that are either in production or distribution sides of foods and beverages, cleaning products, personal care products, household items, Cosmetics etc. Some of the most common name that may pop up in my mind are say Coca-Cola, P & G, Clorox, Kellogg, Walmart, Target, Costco so on. In stock market terminology, this sector is called Non-cyclical, cause does not matter what happens to greater economy, they perform relatively stable. The reason is obvious, does not matter what financial situation we are in, we still need to go to groceries, still need to by toothpaste, toilet paper, laundry powder etc.

In my household, on average we spend about $600/month on consumer staples. Depending on situations, we cut back on traveling and many other costs, but this is something I guess no one can escapee spending. May be there are some bit adjustment here and there, but I guess in most household this portion of spending remains constant.

Now what are the qualities of the stocks in this sector that I like:

1.    Stability: Historically companies in this sector had less bumpy run than any other sector. Even during 2008 financial crash, this sector suffered smaller drop in stock price than the overall S & P.

2.    Dividend: Companies operating in this sector are usually large and are in business in for many years. Think about companies like Coca-Cola (since 1892), Costco (1983), Kellogg (1906). Due to their solid balance sheet, they usually pay solid dividend and many of them are part of Dividend Aristocrat list.

3.    Consistent growth: Companies in this sector do not see any stock price going skyrocket like Amazon, Netflix or Tesla. However, they maintain a steady growth rate and hence, in the long run they catch up or do even better.

These are the rationale for investing into this sector for my portfolio. I guess due to these qualities, they can be a solid passive income generator in my early retirement.

So, what are the consumer staple stocks I have in my portfolio?

Well, that’s bit mixes of both stocks and ETF. Big chunk of this this sector invested is in Vanguard Consumer Staple ETF (VDC). This ETF was created in 2004 and here is its long but steady ride๐Ÿ˜Š

 

 

This ETF is having an average annual stock price growth of 9.2% (since 2004) with a dividend of 2.55%. Currently it invests in 94 different stocks and here the top 10 holdings in this ETF.

 


Here are some of individual stocks from this sector that I invested:

 

I am sure most of these are very familiar names in every household.

 Overall, I am pretty satisfied on how this part of my portfolio grew in last few years. Hopefully with their stock price rise and reinvested dividend, I will have a sizable portfolio in my early retirement.

 That’s all for today, take care! 

Disclaimer: This article shows my personal opinion and it’s for entertainment purpose only. This is no way professional financial advice. You may seek professional advice or conduct own research before investing. This site uses affiliated links and cookies. Please read the disclaimer & Privacy section for details




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