My Portfolio Now Has 15 Consumer Staples Defensive Sector Stocks After Adding Anheuser-Busch InBev

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Includes: BUD, CL, CVS, DEO, GIS, KHC, KMB, KO, MDLZ, MO, PEP, PG, PM, TGT, UL, UN
by: RoseNose

Summary

The 88 stock portfolio now has 15 consumer staple stocks with the addition of Anheuser-Busch InBev.

I reveal why I sold most of my Unilever shares and added BUD.

I will have 14 stocks in the sector if the remainder of UL gets sold after selling an option on the remainder.

I will in the future try to write a blog about my option moves and not devote future articles to them.

Unilever (NYSE:UL) gave many stock holders a scare but to me it was a delightful opportunity.

CONSUMER STAPLES

They are defined as essential products, such as food, beverages, tobacco and household items. They are our individuals "needs". In general, most consumers refuse to cut them out of their budget regardless of their financial situation and the demand for these products will remain fairly constant. This is why many consider them to be defensive stocks along with utilities, telco and healthcare as they involve some of the most needed quality of life requirements.

Here is a chart of my 15 consumer staple sector holdings with statistics from my last article.

BUD is the new addition at the top.

Name CCC VL S&P DGR-5 C# divi/ yr M* FV NSDq SP IQ Yahoo P/E 8yr P/E
CONSUMER Staples C R Now
Anh Busch (NYSE:BUD) 1 A- 30.4 34 3.97 126 117 na 126.88 20.7 31.1
Colgate-P (NYSE:CL) 53 1 AA- 6.4 8.8 1.56 73 70 68H 69.69 20.6 23.6
CVS Health (NYSE:CVS) 14 1 BBB+ 27.7 30.3 2 104 90 82H 86.04 15.1 13.3
Diageo (NYSE:DEO) 6 1 A- 4.6 Ex 3.2 118 120 110 122.14 17.4 22.6
General Mills (NYSE:GIS) 13 1 BBB+ 9.7 12.8 1.92 58 64 70B 63.6 17.2 20.7
Kraft-Hnz (NASDAQ:KHC) 2 BBB- 2.4 69 98 97B 90.29 29.9 26.7
K-Clark (NYSE:KMB) 45 1 A 6.3 9.5 3.88 111 123.5 132H 125 16.6 20.4
Coca-Cola (NYSE:KO) 54 1 AA- 8.3 11.7 1.4 44 44.5 47B 45.09 19.4 21.5
Mondelez (NASDAQ:MDLZ) F 2 BBB -8.6 0.76 48 49 50B 49.48 18.8 22.8
Altria (NYSE:MO) 47 2 A- 8.3 11.7 2.44 59 70.5 80SB 71.73 15.6 23.7
Pepsi Co (NYSE:PEP) 44 1 A 7.9 10.8 3.01 103 118 116B 115.25 17.9 21.9
Philip Morris (NYSE:PM) 8 2 A 8.8 13.1 4.16 95 105 103H 103.81 16.2 22.8
P & Gamble (NYSE:PG) 60 1 AA- 5.4 8.4 2.71 92 92.5 99SB 90.53 17.6 23.5
Target (NYSE:TGT) 49 1 A 16.1 19.8 2.4 71 74 73H 73.97 14.6 13.1
Unilever 1 A+ Ex 1.42 44 38.85 43H 38 18.4 20.8

Here they are listed again individually by value and portfolio income. Please notice I added BUD which keeps me in the 21% range with decreasing my stake in UL. I did keep some UL in a Roth and wrote or sold a Call option on it for $47.50 getting $1.60 per share bonus with a time factor to May 19th.

Company Name % Value %Inc
CONSUMER Staples15
Anhsr-Busch BUD 0.5% 0.4%
Colgate-Palm CL 0.5% 0.2%
CVS Health CVS 1.1% 0.6%
Diageo DEO 1.8% 1.1%
General Mills GIS 2.1% 1.6%
Kraft-Hnz KHC 0.5% 0.3%
K-Clark KMB 1.9% 1.3%
Coca-Cola KO 2.3% 1.9%
Mondelez MDLZ 0.7% 0.3%
Altria MO 2.5% 2.0%
PepsiCo PEP 0.8% 0.5%
Philip Morris PM 2.9% 2.7%
P & Gamble PG 1.4% 1.0%
Target TGT 1.9% 1.6%
Unilever UL 0.2% 0.1%
21.0% 15.8%

Below is the entire portfolio holdings with defensive sector % holdings in bold.

I do not hold any stocks in the Material sector.

%PV %Pinc
CONSUMER Staples 21.0% 15.8%
CONSUMER Disc 6.8% 3.9%
ENERGY 8.5% 10.4%
FINANCIAL 5.2% 5.9%
BDC 4.2% 9.1%
HEALTH-C 11.0% 7.5%
INDUSTRIAL 5.8% 3.8%
TECH 2.3% 1.6%
TEL-CO 7.5% 8.3%
UTILITIES 14.8% 13.3%
REAL ESTATE H-CARE 4.8% 8.5%
MISC REIT 8.1% 11.9%
100.0% 100.0%

The defensive holdings: Consumer, Health-care, Tel-Co and Utilities

by value =54.3% and 44.9% for income. If I include Healthcare REITs in my income the result is 53.4%.

In passing, I want to add, I have already succeeded in decreasing my Real Estate or equity REIT holdings by income to under 25%, a goal for 2017. I actually now have some room to add to those as I desire when The Price is RIGHT for me, as I want a bargain.

UNILEVER

Unilever is a company of the UK or Great Britain with Depository Receipt shares that sell in the USA.

Here is the Fast Graph for UL:

You can see from the FG the price or black line was heading nicely to the blue line or normal P/E level of 19.2, which really is still way above a 15 P/E or orange line in the graph.

This offer by KHC really was a good deal in my estimation and you can see where the price is again in the graph, UP!

The price of both companies immediately jumped, as the market deemed it a positive. The KHC offer buy price suggested was equivalent to about $50; with cash of $30.23 and 0.222 KHC stock shares per UL share.

I already own KHC and did not really want more. I deemed the price of UL selling for $47.50 to be a good sale price for me. So I sold in my taxable account that very day. I now have capital gains to worry about, but that is not a real concern. I also felt it a win-win, as I owned KHC and if they bought UL, I would still own some. As I did also own some CL, KMB and PG, I felt I had enough stock in the consumer products area.

I wanted to look elsewhere in this sector, as I had also sold RAI when rumors began of its takeover.

I do own DEO and now gave consideration to BUD with its current price decline and nice dividend yield of 3.6%

Anheuser-Busch InBev

From Yahoo Finance:

Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, distribution, and sale of beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 200 beer brands, including Budweiser, Corona, Stella Artois, Beck’s, Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass, and Jupiler. The company was founded in 1366 and is headquartered in Leuven, Belgium.

I want to say thanks and Cheers! to my friend Celone for suggesting I look at BUD. Prost!

Some time ago I thought this company was overpriced and most likely it still is, but not as bad. It has fallen in price nicely.

Please see the FG below: It is headed to its blue line or normal average P/E of 20.7 if you look at 12/17 the earnings are up significantly to $4.71 and the P/E will drop to ~23. The growing earnings as shown here and nice dividend yield of ~3.6% and 5 year DGR of ~30% make it a nice candidate for my portfolio.

The Payout ratio is a bit lofty and concerning, but it did just recently acquire SAB Miller.

I found this information on the investor website regarding dividends and taxation:

Anheuser-Busch InBev ADRs are traded on the New York Stock Exchange under ticker BUD.

Under the income tax conventions between the United States & Belgium and Canada & Belgium, United States and Canadian residents are eligible for reduced Belgian withholding tax (for most people, at a rate of 15% rather than the standard 30%).

I will therefore need to hold it in my taxable account to recover the tax.

It also pays 2x per year and reports in euros as many foreign companies will do. Exchange-rate fluctuations will affect the U.S. dollar amounts received by holders of ADRs. It did pay $3.95 in US$ for 2015, as shown in FG. This = 3.6% yield for the current price of $109. Rose started a position this past week. I did miss the low price of $98, but still started a position. I hope to add more, but I am pleased with this S&P credit rated A quality company with Value Line rating of 1 and A++ financial status.

To all, I actually dislike beer but bought this one in honor of all those that do like it.

Cheers to you all and Happy Investing!

P.S. I can do sector updates on my portfolio if my readers ask.

I recently bought BP and RDS (my replacement R stock for RAI).

I will consider doing an Energy sector update next.

Disclosure: I am/we are long ALL STOCKS IN THE CHART.

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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