Toilet paper, soda, jelly, meat, and household cleaners

How many times each month do you skip going to the grocery store?  Food, paper products, and necessities are all things we buy no matter what the economy or stock market is doing.  These are items we would define as “consumer staples”.  When the going gets tough, we don’t skimp on these items. With inflation heating up and consumers starting to get concerned about purhases again, consumer staples should be a part of every investment portfolio.

The main reasons consumer staples should be in your portfolio include:

1)      Stability. With high unemployment and a troubled housing market, consumers will keep buying everyday items.  Look in the refrigerator, the pantry, and the medicine cabinet.  These items will remain on shopping lists no matter how bad times get.

2)      Dividend income.Most consumer staple stocks have an added bonus - they pay a dividend.  Because the majority of these types of companies are well established, they have a history of buying back shares and raising dividends.

3)      Inflation protection.As commodity prices continue to soar, consumer staple companies tend to be able to withstand rising prices as they can often pass these costs on to consumers. They also can reduce portion sizes without reducing prices.

Here are 10 ideas to consider adding to your portfolio:

1.      “Lotsa meat”:  Hormel Foods (NYSE: HRL):  Fresh meats, sausages, hams, wieners, and bacon; poultry products that comprise JOTS products; and shelf-stable products, including canned luncheon meats, shelf-stable microwaveable entrees, stews, chilies, hash, meat spreads, flour and corn tortillas, salsas, and tortilla chips.

2.      “Not just jelly”:  JM Smuckers (NYSE: SJM):  Coffee, peanut butter, shortening and oils, fruit spreads, canned milk, baking mixes and ready-to-spread frostings, flour and baking ingredients, juices and beverages, frozen sandwiches, dessert toppings, syrups, and pickles and condiments.

3.      “It’s all in the package”:Conagra Foods (NYSE: CAG): Alexia, ACT II, Banquet, Blue Bonnet, Chef Boyardee, DAVID, Egg Beaters, Healthy Choice, Hebrew National, Hunt’s, Marie Callender’s, Orville Redenbacher’s, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack, Swiss Miss, Van Camp’s, and Wesson brands. “

4.      “Give me a kiss!”: Hersey Co. (NYSE: HSY):chocolate bars, tasting squares, home baking products, and professional chocolate and cocoa items; and natural and organic chocolate products consisting of chocolate bars, drinking chocolate, and baking products. 

5.      “It’s spicy Baby!”: McCormick & Co (NYSE: MKC): Spices, herbs, extracts, seasoning blends, sauces, marinades, and specialty foods

7.      “The Doctor’s in the house!” Dr Pepper Snapple Group (NYSE: DPS): Carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks, and mixers

8.      “Put a pineapple on it”. Dole Food Company (NASDAQ: DOLE): Fresh Fruit, Fresh Vegetables, and Packaged Foods.   

9.      “Pass me a tissue” Kimberly Clark (NYSE: KMB): Bathroom tissue, paper towels, napkins, wipers, and a whole host of other bathroom products.

10.   “Clean up on isle number five” Clorex (NYSE: CLX): Cleaners, laundry, home-care, professional products, auto-care products, water-filtration systems, filters, and natural personal care.

As you can see these are items people will always buy no matter what the economy is doing.  These are brand names consumers know and trust.  As a result, these might be the types of companies worth “stocking up on” given the challenging economic times we are living in.