Consumer-Focused Companies Soar Toward New Highs

The steady nature of consumer-focused businesses such as Procter & Gamble, maker of Charmin toilet paper, tends to be seen as a safe bet if the U.S. economy teeters.


Photo:

mario anzuoni/Reuters

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.


KO 2.07%

,

Procter & Gamble
Co.


PG 1.74%

and

Walmart
Inc.,


WMT 0.71%

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.


MCD 0.53%

and

Starbucks


SBUX 8.94%

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

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