seekingalpha.com/article/...500-consumer-staples-sector-part-8
Impeccable Quality, But There Are No Bargains Today In The S&P 500 Consumer Staples Sector: Part 8
Feb. 25, 2015 12:00 PM ET | Includes: AVP, BF.B, CAG, COST, CVS, DPS, GIS, KO, MKC, PG, PM, WFM
Disclosure: The author is long PM,MO,RAI,KRFT,KMB,GIS,KO,SYY,PG,CLX,PEP,DPS,WMT,ADM,CL,MDLZ. (More...)
Summary
•Consumer staples are goods that people are unable or unwilling to cut out of their budgets.
•The Consumer Staples Sector offers some of the highest-quality dividend growth stocks available.
•Most S&P 500 Consumer Staples companies pay dividends and also contain many blue-chip companies with consistent and predictable operating histories.
•It is rare to find blue-chip Consumer Staple companies at fair value; bargains are hard to find.
•Bonus: For F.A.S.T. fundamental analysis, a live earnings and price correlated graph on Procter & Gamble.
Introduction
Of all the sectors covered in this series of articles, the Consumer Staples Sector is likely the most relevant to retired investors and dividend growth investors. From the perspective of quality and safety, this sector is full of blue-chip dividend-paying stalwarts. Some of the most widely-held dividend growth stocks are found here. Many of the best-of-breed companies in this sector have long histories of consecutively increasing their dividends, in some cases over decades. Consistency, predictability and quality are characteristics that many Consumer Staples constituents possess.
However, the impeccable quality of Consumer Staples companies is not a closely regarded secret in the investment world. Therefore, with their popularity often comes a high valuation. Consequently, the opportunity to invest in these stalwarts at reasonable valuations is often hard to find. Therefore, there are those that argue that if you want to include these quality businesses in your portfolios, you must be willing to pay a premium for their operating excellence. To an extent I agree with that argument, but only within reason. Investing at too high of a premium valuation does mitigate some of the low-risk benefit that these quality companies offer.
