3 Legendary Low-Beta Stocks Set to Outperform

These Iconic Low-Beta Stocks Could Continue to Outperform

While going into riskier areas of the market can be exciting and lucrative when the market is moving to the upside, volatility can subject your portfolio to massive drawdowns. That’s why it always makes sense to include at least a few low-beta names in your plans, as these companies allow investors to reduce their downside exposure and passively manage a portfolio over the years. Since many of these stocks are blue-chip names that are beyond their hyper-growth stages, they often pay dividends and generate reliable returns for patient shareholders.

With the way that the tech sector continues to falter given rising interest rates and persistent inflation, it makes sense to explore safer options in the market more than ever. Many of these stocks have already been strong performers in 2022, and with so much uncertainty about the economy still in play, it’s easy to envision a scenario in which this trend continues.

That’s why we’ve put together the following list of 3 legendary low-beta stocks set to outperform. Here’s what sets these stocks apart:

Northrop Grumman Corp (NYSE: NOC)

This aerospace and defense company is legendary thanks to its storied history of U.S. government contracts and a reputation for innovating in the advanced military technology space. With the military operation in Ukraine likely to increase the amount of government spending on defense budgets, companies like Northrop Grumman are in a perfect position to grow their top line over the next few quarters and potentially longer. The firm’s segments include defense services, aeronautics, mission systems, and space systems, and there’s plenty for investors to like about owning a business that generates stable earnings in any economic environment.

With a beta value of 0.72, Northrop Grumman is a lower-volatility name that could offer plenty of upside going forward. The company’s management team recently boosted the dividend by 8%, which is exactly the type of move long-term investors love to see. Shares currently offer investors a 1.35% dividend yield, which is definitely attractive given how inflation continues coming in hot. Northrop Grumman will report its Q1 earnings on April 28th, and investors that have been looking to add shares should certainly keep an eye on how the market reacts to those numbers.

PepsiCo (NASDAQ: PEP)

The beverages industry is essentially dominated by two massive players, which makes them both solid picks for investors given their market-leading positions. While Coca-Cola certainly is a fine low-volatility pick, investors should not overlook PepsiCo, which is a well-managed company that has built a beverage and snack food empire. Did you know that on average, 11 of the 15 best-selling products in convenience stores come from this consumer staples giant?

Whether it's iconic beverage brands like Pepsi, Mountain Dew, 7UP, Tropicana, and Gatorade, or top-selling food brands like Lay’s, Doritos, Ruffles, Tostitos, and Cheetos, it’s safe to say that this company will generate consistently stellar sales for years to come. With plenty of upside in international markets and a goal for cost savings and productivity gains of $1 billion through 2023, this is a consumer-staples name that is absolutely heading in the right direction. Although shares are trading near all-time highs, a 2.52% dividend yield still makes this a great pick for almost any diversified portfolio.

International Business Machines (NYSE: IBM)

While IBM shares carry a beta value of 1.09, it's still less volatile than many other options in the tech sector are could be a great buy at this time following a positive Q1 earnings report. The company topped estimates and forecasted for a strong 2022 in terms of revenue thanks to growing cloud and consulting prospects. If you aren’t familiar with the legendary “Big Blue”, it’s a provider of enterprise IT hardware, software, and services. The opportunity to add exposure to trends like artificial intelligence and hybrid cloud is a no-brainer, plus the company’s margins are already improving after the recent spinoff.

The bottom line here is that IBM operates in a strong area of the tech sector at the moment given how many companies are pursuing digital transformations, which should continue for years to come. With a 5.2% dividend yield and a beta value of 1.09, International Business Machines is a solid tech stock for investors who want exposure to high-upside trends without as much risk as younger growth companies.