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by Stella Osoba, CMT
With the economic uncertainty and fear gripping the financial markets, and the magnificent seven stocks facing selling pressure, it may be time to concentrate on other less glamorous sectors of the market. One such sector is consumer staples. This sector is made up of companies that produce essential household products. Even when the economy is weak, people still have to purchase these goods to live.
Position: N/A
Stella Osoba, CMT
Stella Osoba is a trader and financial writer. She is a frequent contributor to "Technical Analysis of Stocks and Commodities" magazine and "Traders.com Advantage" as well as other financial publications.
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TECHNICAL ANALYSIS
A Dividend Stock That Might Be A Good Bet
03/27/25 03:45:17 PMby Stella Osoba, CMT
With the economic uncertainty and fear gripping the financial markets, and the magnificent seven stocks facing selling pressure, it may be time to concentrate on other less glamorous sectors of the market. One such sector is consumer staples. This sector is made up of companies that produce essential household products. Even when the economy is weak, people still have to purchase these goods to live.
Position: N/A
| Over the past month (February 2025) the Consumer Staples Sector Fund (XLP), an ETF which tracks the consumer staples sector, has been the best performing of the S&P's 11 sectors. Of the ten industries that make up this sector, the Tobacco industry, or Dow Jones U.S. Tobacco Index ($DJUSTB), is the best performing one. One of the companies that currently ranks at or near the top is Altria Group Co (MO). |
| Previously known as Phillip Morris Co,, rebranded in 2003, it became Altria Group. They are one of the world's largest producers of tobacco and tobacco products. Though tobacco is not strictly speaking an essential consumer product, because it is a product that people will make room in their budgets for in good times and in bad, it is considered a consumer staple. |
| Figure 1 is a daily chart of tobacco giant MO. Annotated on the chart is the breakout in June 2024 of its prior April 2022 highs. Even though this is a bullish chart, the main reason to have a position in consumer utilities which are value stocks is not the price appreciation which tends to be more stable than that of growth stocks, but for its dividends. |
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| Figure 1. Daily chart for MO. |
| Graphic provided by: StockCharts.com. |
| |
| MO pays out dividends at $4.00 per share which is a dividend yield of just over 7%. This rate beats many high yield savings accounts with the added benefit of holding a security for the long term that has the possibility of capital appreciation. |
| Value stocks are often more stable and less volatile than growth stocks. Therefore, they tend to be less attractive tradable stocks. Patient buy and hold investors can hold the stock for the long term and reap the generous dividend payments. |
Stella Osoba is a trader and financial writer. She is a frequent contributor to "Technical Analysis of Stocks and Commodities" magazine and "Traders.com Advantage" as well as other financial publications.
| E-mail address: | stellaosoba@gmail.com |
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