Motley Fool Suggests Low-Beta Stocks for Portfolio Stability
The Motley Fool has identified three stocks with low beta values as potential additions to long-term portfolios, citing their historical performance relative to the S&P 500. The publication argues that these defensive holdings, which include Waste Management, PepsiCo, and Realty Income, may offer stability during market pullbacks. The S&P 500 recorded double-digit gains in six of the past seven full years and was up 15% year to date at the time of writing, making a potential correction plausible. Beta measures a stock's volatility compared to the overall market; a beta of 0.75 indicates a stock moves about 75% as much as the S&P 500. While not a precise predictor, low beta often reflects less volatility. Waste Management, trading under the ticker WM, has a beta of 0.43. As a waste collection and recycling company, it is considered a defensive stock because its services are required regardless of economic conditions. The stock has averaged annual gains of 14.1% over the past 15 years. Its forward-looking price-to-earnings ratio stands at 22.5, below the five-year average of 27.3. Waste Management recently reported a dividend yield of 1.8%, with total annual payouts rising from $2.05 per share in 2019 to $2.80 in 2023 and $3.54 currently. In its second quarter, the company posted revenue of $6.7 billion, a 4% year-over-year increase, and aims to boost growth through investments in sectors like medical waste. PepsiCo, with a beta of 0.36, offers snack and beverage brands including Lay's, Doritos, Cheetos, Quaker, Gatorade, Pepsi-Cola, Mountain Dew, and SodaStream. The stock has a recent dividend yield of 4.7%, with annual payouts increasing from $3.79 per share in 2019 to $4.95 in 2023 and $5.75 currently. Its forward-looking price-to-earnings ratio is 14, well below the five-year average of 20. The stock has declined recently due to inflation and shifting consumer preferences toward healthier options. PepsiCo is addressing these challenges with dye-free Doritos and the acquisition of probiotic drinks. Realty Income, a real estate investment trust with a beta of 0.70, has a dividend yield of 6%. It owns over 15,500 properties leased to approximately 1,800 clients via triple-net leases, where tenants cover taxes, insurance, and operating expenses. The portfolio focuses on retail, industrial, and agricultural clients across more than 90 industries, including grocery stores and home improvement centers. Realty Income's occupancy level is currently 98.8%, having never dropped below 96%. The Motley Fool suggests that owning such stocks can reduce portfolio decline during market downturns while providing consistent income.
The Motley Fool has identified three stocks with low beta values as potential additions to long-term portfolios, citing their historical performance relative to the S&P 500. The publication argues that these defensive holdings, which include Waste Management, PepsiCo, and Realty Income, may offer stability during market pullbacks. The S&P 500 recorded double-digit gains in six of the past seven full years and was up 15% year to date at the time of writing, making a potential correction plausible. Beta measures a stock's volatility compared to the overall market; a beta of 0.75 indicates a stock moves about 75% as much as the S&P 500. While not a precise predictor, low beta often reflects less volatility. Waste Management, trading under the ticker WM, has a beta of 0.43. As a waste collection and recycling company, it is considered a defensive stock because its services are required regardless of economic conditions. The stock has averaged annual gains of 14.1% over the past 15 years. Its forward-looking price-to-earnings ratio stands at 22.5, below the five-year average of 27.3. Waste Management recently reported a dividend yield of 1.8%, with total annual payouts rising from $2.05 per share in 2019 to $2.80 in 2023 and $3.54 currently. In its second quarter, the company posted revenue of $6.7 billion, a 4% year-over-year increase, and aims to boost growth through investments in sectors like medical waste. PepsiCo, with a beta of 0.36, offers snack and beverage brands including Lay's, Doritos, Cheetos, Quaker, Gatorade, Pepsi-Cola, Mountain Dew, and SodaStream. The stock has a recent dividend yield of 4.7%, with annual payouts increasing from $3.79 per share in 2019 to $4.95 in 2023 and $5.75 currently. Its forward-looking price-to-earnings ratio is 14, well below the five-year average of 20. The stock has declined recently due to inflation and shifting consumer preferences toward healthier options. PepsiCo is addressing these challenges with dye-free Doritos and the acquisition of probiotic drinks. Realty Income, a real estate investment trust with a beta of 0.70, has a dividend yield of 6%. It owns over 15,500 properties leased to approximately 1,800 clients via triple-net leases, where tenants cover taxes, insurance, and operating expenses. The portfolio focuses on retail, industrial, and agricultural clients across more than 90 industries, including grocery stores and home improvement centers. Realty Income's occupancy level is currently 98.8%, having never dropped below 96%. The Motley Fool suggests that owning such stocks can reduce portfolio decline during market downturns while providing consistent income.