The All-Defensive Team: 25 Low Beta Dividend Stocks For An Uncertain Market (Part 3)

Includes: JNJ, KMB, NJR, RAI, WMT
by: Parsimony Investment Research


Dividend investors should hope for the best, but prepare for the worst by adding some low beta stocks to their portfolio.

Stocks with low relative betas tend to generate stable cash flow regardless of the state of the economy.

The 5 stocks highlighted below have an average beta of 0.45 and an average dividend yield of 3.2%.

In the current market environment, it is important for income investors to choose their dividend stocks wisely as they are putting new money to work. As volatility increases (especially downside volatility), investors may want to add some low beta stocks to their holdings to help dampen portfolio volatility. In general, companies with low betas will tend to be less volatile than the general market.

Low Beta Dividend Stocks For Your Portfolio

Stocks in "defensive" sectors (like consumer staples, healthcare, and utilities) typically have low relative betas since these companies tend to generate stable cash flow regardless of the state of the overall economy.

That said, we recently scanned our entire dividend stock universe and came up with our current "All-Defensive" Team. This team is made up of 25 "defensive" dividend stocks with the highest Parsimony Ratings (that also meet the parameters below):

  • Beta (5-year) < 0.70
  • Dividend Yield > 2.5%
  • Parsimony Rating > 75

We will highlight each of these stocks over the course of a 5-part series. Below is a schedule of the entire series. Please make sure to "follow" us so that you will be notified when each new article is published.

The All-Defensive Team: Third Team

Our 25 All-Defensive Team stocks have an average beta of 0.46 and an average dividend yield of 3.4%. This article highlights the 5 stocks that made the Third Team (stocks ranked #11-15). The tables below summarize some of the key data points that we analyze when ranking our dividend stocks.

#15 New Jersey Resources Group (NYSE:NJR)

New Jersey Resources has paid a continuous quarterly dividend to its shareholders since 1952. Recent dividend growth has been very steady as well with 5-year and 10-year CAGRs of 7.1% and 7.0%, respectively. In addition, NJR has very high Financial Stability (76) and Dividend Sustainability (82) ratings for a Utility. This is definitely a stock to keep on your radar!

#14 Wal-Mart Stores (NYSE:WMT)

Wal-Mart is one of the best dividend growth stocks of all time (in our opinion). The company has increased its dividend at a compound annual rate of 14.6% and 18.0% over the last 5 and 10 years, respectively. Also, the company still has a very modest payout ratio of 38%, so it has plenty of room to continue to increase its dividend in the future.

#13 Reynolds American (NYSE:RAI)

RAI has a very high Risk/Reward Rating (98) and the company has delivered shareholders a total return of 301% over the past 5 years driven by a very nice dividend yield (currently 4.6%) and a compound annual dividend growth rate of 8.5%. RAI generates a significant amount of cash (35%+ EBITDA margin) and we expect that the company will continue to grow its dividends in the future.

#12 Johnson & Johnson (NYSE:JNJ)

Johnson & Johnson has a decent dividend yield of 2.8% and it has grown its dividend for 50 consecutive years, including a compound annual growth rate of 10.6% over the past 10 years. In addition, the company has a strong balance sheet with very little debt as illustrated by its high Financial Stability rating (92).

#11 Kimberly-Clark Corp. (NYSE:KMB)

Kimberly-Clark has a nice current dividend yield (3.0%) and a very respectable 5- and 10-year dividend growth rate of 6.9% and 8.7%, respectively. The stock has also performed well over the past 5 years, with a total return around 163%. All that with an ultra low beta of 0.25!


If you are looking to generate safe and stable income in a volatile market environment, low beta dividend stocks in defensive sectors are a great way to accomplish this goal. We believe that any of the 25 stocks on our All-Defensive Team would make a nice addition to a long-term dividend portfolio.

Disclosure: I am long WMT, RAI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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