Investor confidence has taken a hit this week as rising Treasury yields weigh on the market. Over the past three days, the S&P 500 has seen its longest decline since early September, reflecting growing uncertainty. Meanwhile, the 10-year U.S. Treasury yield has jumped 14 basis points in just a few sessions, bringing the total rise for October to 46 basis points.
The mix of higher yields, tempered expectations for future Federal Reserve rate cuts, geopolitical tensions, and upcoming U.S. elections has kept the market on edge. With volatility building, seeking shelter in low-risk, low-beta stocks such as Walmart Inc. (WMT), Philip Morris International Inc. (PM), and Colgate-Palmolive Company (CL) could be a wise move for investors.
In September, the Federal Reserve initiated its long-awaited rate cuts, marking the beginning of what is expected to be a gradual easing of interest rates through 2025. While some were surprised by the 50-basis-point cut, others viewed it as a necessary step to maintain economic balance. Still, recent market turbulence suggests that concerns over the economy haven’t disappeared.
Volatility returned in October, fueled by fresh concerns about the economy. Investors were rattled by the latest inflation report, which showed prices creeping up in September after months of decline. The Consumer Price Index (CPI) rose 0.2% for the month, slightly above expectations. This sparked renewed fears of a recession and raised doubts about the pace of future rate cuts.
As a result, consumer confidence has dipped. The University of Michigan’s latest survey showed that sentiment dropped to 68.9 in October, down from 70.1 in September.
In times like these, low-beta stocks can be a good option for investors seeking stability. These stocks tend to be less volatile than the broader market, making them safer bets when uncertainty is high. Their steady performance and potential for reliable returns make them attractive safe havens during periods of market turbulence.
With that in mind, let’s discuss the fundamentals of the above-mentioned stocks in detail:
Walmart Inc. (WMT)
Retail giant WMT operates supercentres, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and e-commerce websites, including walmart.com and Walmart.com.mx flipkart.com, and others. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
In February 2024, the company raised its dividend by 9% year-over-year to $0.83 per share on a post-stock split basis ($2.49 per share on a pre-split basis), underscoring its commitment to rewarding shareholders.
WMT’s four-year average dividend yield is 1.48%, while its annual dividend translates to a 1% yield on prevailing prices. Its dividend has grown at a 3.6% CAGR over the past three years and a 2.9% CAGR over the past five years. Further, this hike marked the company’s 51st consecutive year of dividend growth.
For the fiscal second quarter that ended June 30, 2024, WMT’s total revenues increased 4.8% year-over-year to $169.34 billion, driven by a 21% increase in its global eCommerce sales. Its adjusted operating income grew 7.2% from the year-ago value to $7.94 billion, while its adjusted EPS came in at $0.67, up 9.8% year-over-year. Also, the company’s attributable net income for the period amounted to $4.50 billion.
Street expects WMT’s revenue for the third quarter (ending October 2024) to increase 4.3% year-over-year to $166.23 billion. Its EPS for the current quarter is expected to grow by 3.4% from the prior-year period to $0.53. Moreover, the company surpassed the revenue and EPS estimates in each of the trailing four quarters, which is promising.
Shares of WMT have gained 54.2% over the past nine months to close the last trading session at $82.51. Its five-year monthly beta of 0.52 indicates comparative stability compared to the broader market.
WMT’s POWR Ratings reflect this robust outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has an A grade for Stability and a B for Growth, Momentum, and Sentiment. Among the 37 stocks in the A-rated Grocery/Big Box Retailers industry, it is ranked #8. Click here to see WMT’s rating for Value and Quality.
Philip Morris International Inc. (PM)
PM is a tobacco company that focuses on delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sectors. The company’s product portfolio consists of cigarettes and smoke-free products, such as heat-not-burn, vapor, and oral nicotine products.
On September 12, PM’s board of directors increased the company’s regular quarterly dividend by 3.8% to an annualized rate of $5.40 per share. It paid a quarterly dividend of $1.35 per share, up from $1.30 per share, to its shareholders on October 10, 2024.
With 15 years of consecutive dividend growth, the company’s annual dividend translates to a yield of 4.07% on the current share price. Its four-year average yield is 5.21%. PM’s dividend payout has grown at a CAGR of 2.7% over the past three years.
PM’s net revenue increased 8.4% year-over-year to $9.91 billion for the third quarter ended September 30, 2024. Its adjusted operating income rose 11.2% from the year-ago value to $4.15 billion, while its attributable net earnings came in at $3.08 billion, representing an increase of 50% from the prior-year quarter.
Moreover, the company’s adjusted EPS increased 14.4% year-over-year to $1.91. Also, its cash and cash equivalents came in at $4.26 billion, indicating an increase of 39.2% from $3.06 billion as of December 31, 2023.
The consensus EPS estimate of $1.52 for the fiscal fourth quarter (ending December 2024) represents an 11.9% improvement year-over-year. The consensus revenue estimate of $9.56 billion for the ongoing quarter represents a 5.7% increase from last year. The company has an impressive surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.
Over the past year, the stock has gained 42.9%, closing the last trading session at $129.86. It has a beta of 0.58.
PM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. Out of nine stocks in the B-rated Tobacco industry, it is ranked #3. Click here to see the other PM ratings for Growth, Value, and Momentum.
Colgate-Palmolive Company (CL)
CL manufactures and sells consumer products internationally. The company operates through two segments: Oral, Personal and Home Care; and Pet Nutrition. It offers products like toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants, and antiperspirants.
On September 12, CL’s Board of Directors declared a quarterly dividend of $0.50 per common share, payable on November 15, 2024, to shareholders of record on October 18, 2024.
CL pays an annual dividend of $2, which translates to a yield of 2.01% at the current share price. Its four-year average dividend yield is 2.30%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.4% over the past three years. CL has raised its dividends for 61 consecutive years.
During the third quarter that ended September 30, 2024, CL’s net sales increased 2.4% year-over-year to $5.03 billion. Its non-GAAP operating profit grew 4.8% from the year-ago quarter to $1.08 billion. Non-GAAP net income attributable to CL came in at $750 million or $0.91 per share, up 5.6% and 5.8% from the prior-year quarter, respectively.
Analysts expect CL’s revenue and EPS for the fourth quarter (ending December 2024) to grow 2.1% and 5% year-over-year to $5.06 billion and $0.91, respectively. The company topped the consensus revenue and EPS estimates in all four trailing quarters.
Shares of CL have surged 31.3% over the past year and 19.9% year-to-date to close the last trading session at $95.61. It has a beta of 0.40.
CL’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
CL has an A grade for Quality and a B grade for Stability and Sentiment. It is ranked #15 out of 58 stocks in the B-rated Consumer Goods industry.
In addition to the POWR Ratings we’ve stated above, we also have CL ratings for Growth, Value, and Momentum. You can get all CL ratings here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
WMT shares . Year-to-date, WMT has gained 58.54%, versus a 22.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
The post 3 Safe Haven Stocks for Market Volatility appeared first on StockNews.com