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Chart of the Week:
The Safest Income Option in Today's Market Anthony Summers, Financial Research Associate, The Oxford Club
If there's one thing that's certain about today's market, it's that no one is certain where it's headed.
As investor confidence drops, many have begun to search for safer opportunities outside of the markets. (As Managing Editor Rachel Gearhart covered last week, silver is one popular option.)
For those who prefer stocks, finding the right place to invest has been difficult. The S&P 500 is down nearly 5% from its all-time high in May of last year.
But, as you can see in today's chart, one sector has provided a 7.8% gain during this same period...
Consumer staples. This corner of the market includes notable companies such as Procter & Gamble (NYSE: PG) and Colgate-Palmolive (NYSE: CL). We're talking about businesses that create products most of us use on a regular basis.
Unlike expensive watches or high-resolution televisions, these are practical items. The kind consumers will continue to buy no matter how bad the economy gets.
For this reason, the consumer staples sector has a record of outperforming choppy markets. Just look at the numbers:
It should come as no surprise. After all, during the Great Recession, you didn't quit buying household necessities like dish soap, toilet paper, milk or eggs.
It's the reason why Tyson Foods Inc. (NYSE: TSN) has seen its shares jump 24.8% so far this year. And shares of the Campbell Soup Company (NYSE: CPB) have risen 20.1% over the same period.
Not only do these companies tend to be less volatile... they're also a more stable source of dividend income. Take Philip Morris International (NYSE: PM) for example. (Yes, tobacco counts as a consumer staple.) The company's stock has grown 9.6% this year and offers an attractive 4.3% yield.
Or how about General Mills (NYSE: GIS)? Its share price has risen nearly 5% while investors collect a 3% yield.
With stable income and capital growth, it's easy to see why these companies become more attractive when the broad market is in the red.
P.S. There's no single factor weighing more heavily on stocks than the collapse of energy prices. As you've probably heard, opportunities in the downtrodden energy and resources sector will be our main focus at this year's Investment U Conference.
Considering how unfairly some of these stocks have been treated, we're expecting some major comebacks (translation: huge returns) over the coming months. But you don't have to physically attend the conference to get our editors' best picks...
You can access every single recommendation from the comfort of your own home via Investment U LIVEstream. Click here for details.
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