Nervous About the Stock Market? History Says Owning These Stocks Can Help You Sleep Peacefully at Night.
These three stocks sport low betas -- meaning they're much less volatile than the overall market.
Feeling uneasy about the stock market? History suggests certain stocks could help you feel more at ease. The S&P 500 has experienced double-digit gains six times in the last seven years, with recent gains of 15% year-to-date. However, a market pullback is still a possibility, so diversifying your investments is wise. One strategy is to seek out stocks with low betas, which measure a stock's historical performance relative to the overall market.
A beta of 1 indicates the stock moves in sync with the S&P 500, while a beta below 1 suggests lower volatility.
Waste Management (WM) is one such stock with a beta of just 0.43. As a defensive company, it provides essential services regardless of economic conditions. Its stock has yielded an average annual return of 14.1% over the past 15 years and currently offers a dividend yield of 1.8%. With a forward-looking price-to-earnings (P/E) ratio of 22.5, it appears reasonably valued. Moreover, Waste Management has been increasing its dividend payouts, from $2.05 per share in 2019 to $3.54 per share recently.
Another low-beta option is PepsiCo (PEP), with a beta of 0.36. The company's diverse portfolio of snack and drink brands, including Lay's, Gatorade, and Mountain Dew, appeals to consumers even during economic fluctuations. PepsiCo pays a dividend with a current yield of 4.7% and has increased its annual payout from $3.79 in 2019 to $5.75 per share recently.
The stock is also attractively priced at a forward-looking P/E ratio of 14, well below its five-year average of 20. PepsiCo has been implementing strategies to navigate challenges like inflation and shifting consumer preferences towards healthier options. Investing in PepsiCo could potentially reward you with strong dividend income and a promising turnaround.
Finally, Realty Income (O) boasts a beta of 0.70 and a generous dividend yield of 6%. As a real estate investment trust (REIT), it owns and rents out more than 15,500 properties across various industries, including retail, industrial, and agricultural sectors. Realty Income maintains an impressive 98.8% occupancy rate and has never seen a drop below 96%.
This stability can provide peace of mind during market downturns. Its long-term dividend growth and solid track record make it an appealing choice for investors seeking income and reduced market volatility.
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