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Lower Risk Investing

By April 8, 2019May 13th, 2022featured articles

Click the link below to hear our interview with Newstalk’s Business Editor, Vincent Wall, where we discuss our long-standing US & European Defensive Global Consumer Franchise Stock Theme. The interview lasts around 15 minutes.

The theme has been running since mid-2010 and offers investors a middle ground between the higher risks associated with mainstream equity investing and risk-free government bonds. For today’s investor, risk-free government bonds offer miniscule yields (returns), so that our theme retains considerable appeal. The theme involves investing in companies that have strong consumer brands, global reach and are selling products that are purchased regularly either because they are low-priced everyday essentials or treats.

These characteristics tend to lead to demand resilience providing such companies, or a basket of them, with defensiveness of earnings even in recessions. In the US, stocks in the theme include Coca-Cola, Colgate, Mondelez, Kellogg, Procter & Gamble, McDonalds and Johnson & Johnson; in Europe, the list includes Nestle, Unilever, Diageo, Reckitt Benckiser, AG Barr, Heineken, Kerry and Henkel.

Today, this basket of companies offers an initial dividend yield of 2.6%, which together with ongoing earnings growth of even 3-4% per annum holds out the prospect of continued annual returns of 5-6% per annum over the medium-term from here (share price gains plus dividend income). This returns profile compares to 10-year US and European government bonds which, at present, offer an average fixed yield to redemption of just 1.3% with no growth potential.

About GillenMarkets
GillenMarkets offers three services. We provide advisory asset management services (for personal, pension or corporate monies). We also run 1-day investment training seminars (the next one is on Saturday, 15th June). Lastly, we publish Ireland’s only investment newsletter that you can subscribe to and that provides you with the tools to be a successful do-it-yourself investor.