Image Source: UnsplashThe S&P 500 is coming off a strong year, with a 23% return seen in 2023. If the market takes a downturn in the back half of 2024, investors can attempt to lower their portfolio volatility by reviewing a stock’s beta value (a common measure of stock volatility) when purchasing a stock.Generally, the higher the beta, the more volatile it can be relative to the S&P 500 index, while low-beta stocks generally decline less than the broader market in a downturn.The following 3 low beta stocks can reduce portfolio volatility due to their low betas, along with their dividend payouts.

Low Beta Stock: Hormel Foods (HRL)
Hormel operates in the food products industry with over $12 billion in annual revenue. Hormel has kept its core competency as a processor of meat products for well over a hundred years, but it has also grown into other business lines through acquisitions. The company sells its products in 80 countries worldwide, and its brands include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.In addition, Hormel is a member of the Dividend Kings, having increased its dividend for 58 consecutive years.Hormel posted first quarter earnings on Feb. 29, 2024, and results were better than expected on both the top and bottom lines. Adjusted earnings-per-share came to 41 cents, which was seven cents ahead of expectations. Revenue was $3 billion, which was up 1% year-over-year, and beat estimates by $90 million.Volume was up 4% year-over-year to 1.1 billion pounds. Sales growth was driven by premium bacon, prepared proteins, poultry, and snacking categories. Retail volume was up 2%, while net sales were down 2%, and segment profit was down 3%. In food service, volume was up 8%, while net sales were up 9% and segment profit rose 10%. International volume was up 11%, net sales fell 3%, and segment profit was up 1%.Hormel’s main competitive advantage is its ~40 products that are either #1 or #2 in their category. Hormel has brands that are proven, and that leadership position is difficult for competitors to supplant. In addition, Hormel has a global network of distributors that few food companies can rival.

Low Beta Stock: J.M. Smucker (SJM)
J.M. Smucker company is an international powerhouse of packaged food and beverage products including iconic names like Smucker’s, Jif and Folgers, along with various pet food brands. The company has a market capitalization of $12 billion, and it generated $8 billion in sales last year.On Sept. 11, 2023, Smucker’s agreed to acquire Hostess Brands in a cash-and-stock deal with value of $5.6 billion, which includes debt. Hostess Brands has many sweet baked goods brands, which will expand the product portfolio of Smucker’s and create synergies.On Feb. 27, 2024, Smucker’s reported results for the third quarter of fiscal 2024, which ends on April 30, 2024. Currency-neutral organic sales grew 6% over the prior year’s quarter, mostly thanks to strong sales of cat food as well as material price hikes. The solid volumes amid strong price hikes are testaments to the strength of the brands of the company. Adjusted earnings-per-share grew 12%, from $2.21 to $2.48, and exceeded the analysts’ estimates by $0.21.Smucker’s slightly improved its guidance for fiscal 2024. It now expects comparable sales growth of 8.75% (vs. 8.5%- 9.0% previously), and narrowed its guidance for adjusted earnings-per-share from $9.25-$9.65 to $9.45-$9.65.Smucker’s has increased its dividend for over 25 years, making it a Dividend Aristocrat.

Low Beta Stock: Consolidated Edison (ED)
Consolidated Edison is a holding company that delivers electricity, natural gas, and steam to its customers in New York City and Westchester County. The company has annual revenues of more than $14 billion.On Feb. 15, 2024, Consolidated Edison announced fourth quarter and full year results for the period ending Dec. 31, 2023. For the quarter, revenue decreased 14.6% to $3.44 billion, which was $224 million below estimates. Adjusted earnings of $346 million, or $1.00 per share, compared to adjusted earnings of $288 million, or $0.81 per share, in the previous year. Adjusted earnings-per-share were $0.03 better than expected.Thanks to rate hikes and population growth, the company has been able to raise its dividend for 50 years. Consolidated Edison initiated its biggest investment program in its history last year. It has completed its installation smart meters in its network. This will help customers optimize energy use while the company will be able to realize lower peak demand and thus reduce its operating cost. The company also expects capital investment of ~$4.8 billion for 2024, and ~$23 billion for 2025 through 2028.One key competitive advantage for Consolidated Edison is that consumers do not curtail their electricity consumption even during the roughest economic periods, so the stock is resilient during recessions. Consolidated Edison’s stock has a Beta score of 0.29.More By This Author:3 Dividend Stocks For 10%+ Annual Returns
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