Consumer goods stocks are attractive from a long-term investment perspective because they are generally less volatile and tend to have slow but steady growth over many years.While they may not offer the thrill of holding hot technology stocks like Facebook(FB) or Apple (APPL) they offer diversification benefits to a portfolio and most importantly they provide downward protection in a bear market. Boring stocks of companies that produce basic things like food, coffee, soft drinks, etc. also offer decent dividends and dividend growth. Hence these types of stocks are suitable not for young investors but also for senior citizens who may be looking for income and some growth.

The following are the Top 15 Consumer Goods Companies from the Global Top 100 Companies by Market Capitalization report published by PricewaterhouseCoopers earlier this year. Investors looking to add stocks in the consumer goods sector can consider this list as a starting point for further research.

1.Company: Nestle SA (NSRGY)
Current Dividend Yield: 3.23%
Sector: Food Products
Country: Switzerland

2.Company:Procter & Gamble Co (PG)
Current Dividend Yield: 3.06%
Sector: Household Products
Country: USA

3.Company: Samsung Electronics Co Ltd
Sector: Electronics
Country: South Korea

4.Company: Toyota Motor Corp (TM)
Current Dividend Yield: 2.75%
Sector: Autos
Country: Japan

5.Company: Anheuser-Busch InBev SA/NV (BUD)
Current Dividend Yield: 1.76%
Sector:Beverages
Country: Belgium

6.Company: The Coca-Cola Co (KO)
Current Dividend Yield: 2.94%
Sector:Beverages
Country: USA

7.Company:Philip Morris International Inc (PM)
Current Dividend Yield: 4.76%
Sector: Household Products
Country: USA

8.Company: PepsiCo Inc (PEP)
Current Dividend Yield: 2.88%
Sector:Beverages
Country: USA

9.Company: Unilever NV (UN)
Current Dividend Yield: 3.11%
Sector: Food Products
Country: The Netherlands

10.Company:Volkswagen AG (VLKAY)
Current Dividend Yield: 2.46%
Sector: Autos
Country: Germany

11.Company: Ambev SA(ABEV)
Sector: Beverages
Current Dividend Yield: 4.30%
Country: Brazil

12.Company: British American Tobacco PLC (BTI)
Current Dividend Yield: 4.16%
Sector:Tobacco
Country: UK

13.Company: L’Oreal SA (LRLCY)
Current Dividend Yield: 2.15%
Sector: Personal Products
Country: France

14.Company:Daimler AG (DDAIF)
Current Dividend Yield: 3.83%
Sector: Autos
Country: Germany

15.Company: LVMH SA (LVMUY)
Current Dividend Yield: 2.45%
Sector: Luxury Goods
Country: France

16.Company:Inditex S.A. (IDEXY)
Current Dividend Yield: 2.15%
Sector: Speciality Retail
Country: Spain

Note: Dividend yields noted above are as of Sept 18, 2014. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

The current dividend yield of the S&P 500 is 1.91%. It has stayed around the 2% mark for many years. Despite corporate profits soaring and reaching record-high levels most U.S. companies have not shared the higher earnings with their shareholders in  the form of higher dividend payouts.

The chart below shows the long-term declining trend of dividend payout ratio in the U.S.:

Click to enlarge

Source: Going Global Can Pay Dividends, PIMCO, December 2013

The takeaway here is that investors should not assume that higher profits will automatically lead to higher dividend payouts. This is especially true with U.S. firms. Hence investors should plan investment strategies accordingly. Some of the reasons for the low dividend payout ratios include: cultural change in the past few decades when stock prices soared and investors ignored dividends, many corporate management having crazy dreams of growing big by acquisitions, ability to “play” with companies’ retained earnings to manipulate stock prices via share buybacks, powerless mom&pop retail investors, docile big investors such as mutual funds and others, tax policies, etc. All these have contributed to this sad state of affairs of the U.S. corporate world. This situation is unlikely to change in the foreseeable future.

Related ETFs:

• iShares Dow Jones Select Dividend ETF (DVY)
• SPDR S&P Dividend ETF (SDY)
• Vanguard Dividend Appreciation ETF (VIG)
• Vanguard High Dividend Yield ETF (VYM)

Dislosure: No Postions

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The S&P 500 has more than doubled from the low reached during the global financial crisis. However some investors’ portfolios may still not have recovered fully because some individual stocks they own may still be down from the highs reached before the crisis. Hence cutting down losses on an investment is important. Waiting for a stock that has fallen hard to recover may not be always be the wise strategy especially if the stock shows no signs of uptrend even after many years. So in such cases it is better to take the losses and move on. For example, lets consider a hypothetical $10 stock that falls 90% . In order for an investor to recoup their original investment, the stock has to rise to $1 to $10 (or) to put it in another way it has to rise by 900% which is huge. This stock may take many years to get back to even. So the greater the loss the longer it takes to recover. This simple concept is very important to understand for ordinary investors. The following chart shows this concept figuratively:

Click to enlarge

Source: Source:  Managing risk factors to build a better portfolio, Deutsche Asset & Wealth Management