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Eleven defensive U.S. stocks with low volatility Add to ...

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Defensive U.S.-listed stocks providing a stable income stream, with a history of low earnings volatility and trading at attractive valuations.

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Last year was one characterized by volatility: the S&P 500 saw a 52-week spread of 478 points; early-year leading sectors (telecom, utilities and consumer staples) were victims of sector shifts that accelerated following Donald Trump’s electoral victory, while OPEC’s supply-cut deal and higher inflation expectations catapulted the energy and financials sectors to the top of the pack by year end. We saw crude oil sink almost 30 per cent before ending the year 35 per cent higher than it was on Jan. 1, 2016. Gold rallied 30 per cent early on, yet crossed the finish line only 8 per cent higher than the start of last year. Ten-year U.S. Treasury yields dropped to a low of 1.32 per cent at the end of the second quarter, followed by a reversal in momentum to close at 2.43 per cent by year’s end.

U.S.-listed stocks with a history of low earnings volatility

CompanySymbolSector Market cap ($ Mil.)BetaP/EForward P/EDiv. yieldFCF YieldDiv. Payout Ratio (%) 5 Yr AvgNet Income 5-Year Volatility %
Johnson & JohnsonJNJ-NHealth Care316,343.40.7520.3816.312.8%5.00%54.5%10.8%
Wal-Mart Stores IncWMT-NConsumer Staples211,158.90.0914.9215.842.9%7.54%36.6%3.0%
Amgen IncAMGN-QHealth Care118,164.61.1615.8712.282.9%7.13%31.9%12.5%
CVS Health CorpCVS-NConsumer Staples87,128.10.8617.4313.932.4%6.94%25.0%3.5%
Anthem IncANTM-NHealth Care37,615.90.6716.7612.401.8%9.25%17.9%5.5%
McKesson CorpMCK-NHealth Care33,198.61.0616.4811.830.8%9.02%13.2%10.0%
Kroger CoKR-NConsumer Staples30,883.10.7815.6914.771.5%4.81%21.8%18.5%
Tyson Foods IncTSN-NConsumer Staples22,410.90.1613.8212.901.4%9.02%12.5%9.9%
J M Smucker CoSJM-NConsumer Staples14,904.80.5320.8616.052.3%8.43%49.2%14.8%
Quest Diagnostics IncDGX-NHealth Care12,814.50.6719.5716.941.9%4.27%25.2%15.0%
Universal Health Services IncUHS-NHealth Care10,817.41.1015.7213.820.4%5.93%6.5%3.6%

Source: Thomson Reuters Eikon

Khaled Eniba works in the financial and risk unit of Thomson Reuters and specializes in banking and research.
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