Nov 20, 2022
2022 continues to deliver a blunt reality check to stock market investors.
According to financial services giant Fidelity, the average 401(k) balance dropped from $126,000 a year ago to $97,200 in Q3 — a loss of nearly $29,000, or 23%.
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It’s not exactly a surprise. The benchmark S&P 500 Index is down 17% year to date, while the tech-centric Nasdaq has plunged nearly 30% in the same period.
If you don’t want to get caught up in the market’s wild swings, you might want to check out a few low-beta stocks (also known as low-volatility stocks).
Beta is a measure of a stock’s volatility in comparison to the market as a whole. If a stock has a beta of greater than one, it’s more volatile than the broad market. Stocks with beta values of less than one are less sensitive to the market’s movements.
Here’s a look at three low-beta stocks that could be worth considering.
Walmart (WMT)
At a time when many brick-and-mortar retailers remain in the doldrums, powerhouse Walmart stands out.
The company runs a massive retail business with approximately 10,500 stores under 46 banners in 24 countries. Thanks to its “Everyday Low Prices,” Walmart attracts around 230 million customers to its stores and websites every week.
Walmart could be an opportunity for those looking for low volatility: the stock’s five-year beta is just 0.53 and is actually up 5.5% over the past year.
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And because of the company’s massive economies of scale, the business has remained resilient throughout several economic cycles.
Consider this: Walmart paid its first-ever dividend in 1974. Since then, it has increased its payout every single year.
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Johnson & Johnson (JNJ)
With deeply entrenched positions in consumer health, pharmaceuticals, and medical devices markets, healthcare giant Johnson & Johnson has delivered consistent returns to investors.
Many of the company’s consumer health brands — such as Tylenol, Band-Aid, and Listerine — are household names. In total, JNJ has 29 products each capable of generating over $1 billion in annual sales.
Over the past 20 years, Johnson & Johnson’s adjusted earnings have increased at an average annual rate of 8%.
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JNJ announced its 60th consecutive annual dividend increase in April and now offers an annual dividend yield of 2.6%.
The stock has a five-year beta of 0.57 and is up 8% over the past year.
Coca-Cola (KO)
Coca-Cola is a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.
The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.
Add solid geographic diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can thrive through thick and thin. After all, the company went public more than 100 years ago.
According to the latest earnings report, Coca-Cola’s net revenue grew 10% year over year, while its adjusted earnings per share improved by 7%.
The stock has a five-year beta of 0.58 and has climbed by 11% in 2022.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
