[cnxvideo id=”655412″ placement=”ros”]With the markets making a run at all-time highs, it’s interesting how negative some of the firms we cover on Wall Street have been for most of this year. One thing is for sure, many institutional accounts have more cash than usual, and the last thing they want to do is be sitting on the sidelines if the market breaks out to new highs.
With that in mind, there is the potential for some big volatility, and moving some winners to consumer staples may make good sense now.
One of the firms we cover here at 24/7 Wall St. is UBS, and while the firm is moderately underweight on the overall consumer staples sector, it does have six stocks that fall into its most preferred category. We picked four that appear the safest choices with the highest dividends.
Colgate-Palmolive
This top dividend payer is also a very safe play for investors. Colgate-Palmolive Co. (NYSE: CL) is the stock to buy in consumer staples. The company continues to deliver solid execution and is one of the best-positioned companies in the consumer staples sector, given its strong brands in attractive categories, particularly oral care.
More than half (52%) of total revenues at Colgate-Palmolive are derived in faster-growth emerging economies, and the company maintains leading or near-leading market shares across the Brazil, Russia, India, China (BRIC) regions. While those have slowed over the past year, a pickup in growth could be coming.
After a recent increase, Colgate-Palmolive investors are now paid a 2.18% dividend. The Thomson/First Call consensus price target for the stock is $74.06. Shares closed near that on Tuesday at $71.59.
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CVS
This top stock has acted very well this year, and some think that Warren Buffett may have his eye on the company. CVS Health Corp. (NYSE: CVS) provides integrated pharmacy health care services.
Its Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management, Medicare Part D services, mail order and specialty pharmacy services, retail pharmacy network management services, prescription management systems, clinical services, disease management programs and medical pharmacy management services.
The Retail/LTC segment sells prescription and over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise and greeting cards, as well as provides photo finishing services.
The company operates 9,655 retail stores in 49 states, the District of Columbia, Puerto Rico and Brazil, primarily under the CVS Pharmacy, CVS, Longs Drugs, Navarro Discount Pharmacy and Drogaria Onofre names; online retail pharmacy websites; and 32 on-site pharmacy stores, long-term care pharmacy operations and retail health care clinics.
CVS investors are paid a 1.76% dividend. The consensus price target is posted at $114.48. The stock closed Tuesday at $96.62 per share.
Mondelez
This is another sector giant that makes good sense for conservative accounts. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. The company offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and grocery products. The company’s primary brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.
Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.
Shareholders of Mondelez are paid a 1.5% dividend. The consensus price target is set at $48.69. The shares closed most recently $45.33.
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Philip Morris
This company has continued to grow global market share and makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is the world’s leading international tobacco company, with six of the world’s top 15 international brands and products sold in more than 180 markets.
In addition to the manufacture and sale of cigarettes, including Marlboro, the number one global cigarette brand, and other tobacco products, the company is also engaged in the development and commercialization of reduced-risk products (RRPs), the term it uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Through multidisciplinary capabilities in product development, state-of-the-art facilities and industry-leading scientific substantiation, Philip Morris aims to provide an RRP portfolio that meets a broad spectrum of adult smoker preferences.
Philip Morris shareholders receive a very solid 4.06% dividend. The consensus price target for the stock is $103.34. But note that shares closed below that level on Tuesday at $100.46.
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While the consumer staples sector has run as investors looked for safety, these companies still make good sense. Investors may consider buying partial positions and looking for a market pullback to add to positions.
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