How to Buy Stock in Staples
Staples are industries that manufacture and sell consumer goods and products such as household items, beverages, food, tobacco and prescription drugs. They are referred to as "staples," because when the economy and money is tight, they are products and items that are needed and most consumers cannot, or will not, go without. There are several ways to purchase "staples" in the stock market.
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Identification
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Investors can buy individual stocks that are classified as consumer staples. These include companies such as Procter & Gamble, The Coca Cola Co., McKesson, Kellogg, Philip Morris, Quaker Oats, Colgate and Clorox. These are not flashy companies, but can add a stabilizing influence to a portfolio. Make no mistake, these stocks also are affected by a bear market. Also, if they have a large percentage of overseas sales, they will also be affected by a weak or rising dollar.
Types
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In addition to buying individual shares or stock in specific "staple" companies, investors can also purchase ETFs, or exchange-traded funds. Several ETFs are based on consumer staples and/or their industries. An example is Vanguard's consumer staple ETF which trades under the symbol VDC. Another is the select Spider ETF which trades under the symbol XLP.
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Benefits
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Consumer staples, typically, have a constant and consistent demand. They are considered a defensive addition to an investment account, offering lower risk than tech, oil, and precious metal stocks. In addition, many pay decent dividends. When money is tight, consumers will cut back on many items, but they still need to eat, drink, clean and brush their teeth.
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