πππIn times of geopolitical conflicts and market volatility, the good old fashioned Consumer Staples Sector provides a defensive tactical strategy due to the essential products that we cannot do without on a daily basis. This category includes things like Food and Beverages, Household Goods Hygiene products, Tobacco and Personal products that we use daily.
$Consumer Staples Select Sector SPDR Fund(XLP)$ tracks a market cap weighted index of Consumer Staples stocks drawn from the S&P500.
The Top 10 holdings include $Procter & Gamble(PG)$ $Costco(COST)$ $Pepsi(PEP)$ $Coca-Cola(KO)$
Top 10 holdings weightage is 69%. Total number of holdings is 39.
Procter & Gamble is the Top holding with 14.5% weightage. It may not be a well known name to the public but its products are familiar to many. Gillette razors, Head & Shoulders, Pampers Diapers to name a few. There are a total of 80 brands that are owned by Procter & Gamble.
Costco is the 3rd largest retailer in the world. It is famous for its value for money items offered to its members with a 100% guarantee that comes with a generous return policy.
Walmart is the largest retailer in the world with 10,500 stores in 19 countries, 2.1 million employees. Walmart 's success is due to its well known brand and image as a reliable store. Walmart' s slogan "Save Money, Live Better" reflects the company's goal to give customers the opportunity to buy daily items at the best prices for a better life.
Coca Cola and Pepsico are 2 of the largest Beverages companies in the world. Coca Cola dominates the beverage market share worldwide with 48% while Pepsico has 20.5%.
6 companies out of the Top 10 holdings are Dividend Kings. To be a Dividend King means that the company has been paying increased dividends for a minimum of 50 consecutive years. They are Procter & Gamble, Coca Cola, Pepsico, Walmart, Target and Colgate Palmolive.
Costco has raised its dividends for 19 straight years which means it could join the Elite Club of Dividend Aristocrats within the next few years. A Dividend Aristocrat is a company that has paid increased dividends for a minimum of 25 years.
Dividend Kings and Dividend Aristocrats exemplify companies that are well established and consistently profitable. That is no small feat considering that they have gone through recessions, financial crisis, Corona Virus pandemic and more.
The expense ratio is a low 0.09%. Distributions are paid every 3 months. The current distribution yield is 2.85%.
Performance wise, XLP is up 0.98% today and in the last 5 days it has risen 0.76%. XLP is up 2.2% year todate.
Wall Street Analysts are bullish on XLP with a Buy rating, Target price of USD 81.38, an upside potential of 9% according to Tipranks.
XLP ETF is the largest Consumer Staples ETF with Assets Under Management of USD 14.55 Billion. It is one of the oldest established since December 12 1998.
I like XLP ETF as it is a low cost, value for money ETF, paying nice juicy dividends like a clockwork while waiting for capital growth. I do not expect fireworks in this ETF but like a steady reliable friend, XLP will continue to perform slow and steady through good times and bad times. That is why XLP is my Defensive hedge against high inflation and volatile times.
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