Best consumer goods stocks

Consumer goods are the indispensable items of our daily lives. Think toiletries, your favourite snacks, and any other item that would have you dashing to the corner shop in even the most dismal weather. Producers of these goods aren’t the flashy, headline-grabbing companies. But, these stalwarts do have something going for them – stability.

Rain or shine, recession or boom, we still need to eat, maintain hygiene, and yes, we still want to indulge in our guilty pleasures like sipping a fizzy drink, scoffing chocolate, or having a tipple. Below, we explore the best consumer goods stocks and weigh up the pros and cons of adding them to your portfolio.

What are the best consumer goods stocks?

Navigating the consumer goods sector can be like trying to fill a shopping cart during a supermarket sweep – fast-paced and full of choices. To help you stock up your investment pantry with some quality picks, we’re scanning the aisles and highlighting these top consumer goods stocks from the MSCI World Consumer Staples Index:

Icon	Stock	1 year performance (February 2024)	5 year performance (February 2024)	Link to invest
	Costco Wholesale (COST)	41.25%	233.62%	Invest with XTBCapital at risk
	Danone (BN)	17.18%	-7.58%	Invest with XTBCapital at risk
	Church and Dwight (CHD)	16.22%	49.95%	Invest with XTBCapital at risk
	Procter & Gamble (PG)	12.00%	58.03%	Invest with XTBCapital at risk
	Coca-Cola (KO)	-0.50%	31.06%	Invest with XTBCapital at risk
	Reckitt Benckiser Group (RKT)	-1.35%	-5.33%	Invest with XTBCapital at risk
	Unilever (ULVR)	-6.70%	-6.30%	Invest with XTBCapital at risk
	Pernod Ricard (RI)	-13.86%	8.34%	Invest with XTBCapital at risk
	Target (TGT)	-17.61%	99.11%	Invest with XTBCapital at risk
	Diageo (DGE)	-17.94%	-4.91%	Invest with XTBCapital at risk

What are consumer goods stocks?

Consumer goods stocks are shares of businesses that specialise in producing and selling products that are essential for everyday use. These can range from food and beverages to personal care and household items.

Types of consumer goods stocks

The consumer goods sector is incredibly varied, offering investors a wide range of options. Here are some of the main categories:

• Food producers. These companies focus on the production, distribution, and retail of food and beverages. Examples include Nestlé, Unilever, and Danone.
• Beverage makers. Firms specialising in the production and distribution of beverages, both non-alcoholic and alcoholic. Examples include Coca-Cola, Pepsi, and Diageo.
• Personal and household cleaning products. This category includes companies that produce personal care items like toiletries, as well as household cleaning products. Procter & Gamble, Reckitt Benckiser Group, and Unilever are key players in this space.
• Retailers and supermarkets. These are firms operating supermarket chains and retail stores offering a variety of consumer goods. Walmart, Costco, and Tesco are notable examples.

How to invest in consumer gods stocks

1. Open a sharing-dealing account. The first step in investing in consumer goods stocks is to open a share trading account. Choose a platform that suits your needs, whether it’s one with robust research tools, low fees or a user-friendly interface.
2. Fund your account. Once your account is set up, make a deposit. You can do that via a bank transfer, debit card or any other means allowed by your share-dealing platform.
3. Research and choose consumer goods stocks. Research the best consumer goods stocks (or funds) for your portfolio and then search for them on your chosen platform by company name or ticker symbol.
4. Buy shares. Once you’ve found the consumer goods stock you’re interested in, select the amount you want to invest and create an order to buy shares. And just like that, you’re now officially an investor in the consumer goods sector.

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Why do people want to invest in consumer goods stocks?

Investors are often attracted to consumer goods stocks due to the reliable and steady nature of the revenue these companies generate. The economic impact of everyday essentials is substantial. It’s projected that the total worth they contribute to the world economy will hit $14 trillion (around £11.2 trillion) in 2028, a significant increase from $13 trillion (around £10.4 trillion) in 2024.

Also, the familiarity people have with consumer goods brands often seals the deal for investors. Putting money into companies behind the brands you know and use can instil a sense of comfort, especially given the long and impressive history that many of these blue-chip stocks have.

Finder survey: Would Brits consider investing in consumer goods stocks?

60% of people we surveyed said they already invest in consumer goods stocks or would consider investing in consumer goods stocks.

Advantages of investing in consumer goods stocks

Here are some of the key benefits that might entice you to consider investing in consumer goods stocks:

• Stability. Consumer goods, especially essential items like food and personal care products, are always in demand. This can provide a stable market for companies like Procter & Gamble and Coca-Cola (a favourite of Warren Buffett).
• Recession resistance. Even during economic downturns, consumer goods stocks often hold up well. People may cut back on luxury items, but they still need to buy basic goods, making these stocks a potentially safer bet in tough times.
• Dividends. Many consumer goods companies have a long history of paying dividends, offering investors a regular income stream alongside potential stock price appreciation. Although, payments are never guaranteed.
• Brand loyalty. When people love a brand, they tend to stick with it. This loyalty can mean steady sales and pricing power, helping companies keep their earnings growing even during times of inflation.

Risks of investing in consumer goods stocks

However, it’s not all smooth sailing in the consumer goods sector, and there are risks to be aware of:

• Competition. The consumer goods market can be highly competitive, with many brands getting aped by copycat off-brand products (not pointing any fingers at Lidl or Aldi).
• Cost pressures. Changes in the prices of raw materials can impact the cost of goods sold, affecting profit margins.
• Consumer preferences. Shifts in consumer trends, such as a move towards more sustainable or healthier products, can impact companies that are slow to adapt.
• Supply chain vulnerabilities. Consumer goods companies often rely on complex global supply chains, which can be disrupted by geopolitical events such as trade disputes or pandemics.

Expert comment - What’s the best way to invest in consumer goods stocks?

George Sweeney

Deputy editor

Because this is such a broad category, covering quite a few areas of our daily lives, it means you have plenty of options. For example, you may want to avoid alcohol stocks, or you might look to fill up your investment basket with buckets of booze.

Unless you’re using a broader form of investment like an ETF, it’s worth dividing consumer goods into different sections, and then research and find the sub-sector you’re most comfortable backing. One great thing about consumer goods is that you can actually get quite a lot of exposure with a simple passive index investment backing something like the FTSE 100 or the S&P 500 because these stocks tend to operate at scale (rather than being a small cap option).

Alternative ways to invest in consumer goods stocks

Other than investing in individual stocks of companies in the consumer goods sector, there are other ways of gaining exposure to this industry. Here are some of your options:

• Index funds and exchange-traded funds (ETFs). Investing in ETFs or index funds focused on the consumer goods sector is a practical alternative to buying individual stocks. These funds compile a variety of consumer goods-related stocks, offering broader exposure and potentially reducing risk through diversification.
• Investment funds. Here, a company pools money from investors and then puts it to work in a diversified portfolio of consumer goods stocks. While this offers the advantage of professional management, investors do incur a fee for this service.
• Investment trusts. Investment trusts are closed-ended, meaning the number of shares is fixed and they can trade at a premium or discount to the value of the assets. This structure allows for a more long-term investment strategy, as funds are not subject to continuous trading and investor withdrawals like open-ended funds. And you can grab a bargain if a trust is trading at a discount (below net asset value).

Pros and cons

Bottom line

Consumer goods stocks represent a solid investment choice if you’re looking to add stability and resilience to your portfolio. These stocks are often household names and aim to generate steady revenue streams from everyday products.

Overall, using the best consumer goods stocks available can be a dependable cornerstone in a diversified investment strategy. The top stocks will offer a blend of stability, regular dividends, and the comfort of investing in family-favourite brands. However, there are always risks, so don’t put all your eggs in the consumer goods basket.

Frequently asked questions

• Why invest in consumer goods stocks?

  The potential for steady growth can make consumer goods stocks a reliable addition to your investment portfolio. Always in demand, this sector provides essential products, contributing to its stability as an investment choice.

• Are consumer goods stocks a good choice for long-term investment?

  Consumer goods stocks can be a solid choice for long-term investment, especially if you invest in well-established companies with a track record of resilience and steady performance. However, it's advisable to diversify your investments across different sectors to mitigate risks.

• How do consumer goods stocks perform during economic downturns?

  During economic downturns, consumer goods stocks typically show resilience, thanks to the consistent demand for essential products. The performance, however, may vary based on the company's product range and adaptability to changing economic conditions.

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