Defensive Stocks: Drugs And Drinks

Today, I’ll conclude this week’s coverage of defensive stocks with Pepsico and Merck.

PepsiCo (Ticker: PEP) was founded in 1898 and is headquartered in Purchase, New York. Pepsi offers snacks, foods, and beverages worldwide. Some its brands include Doritos, Gatorade and Rice-A-Roni. Its snacks are salty and sweet, let’s see what the stock is up to.

Photo by israelavila, courtesy of flickr

In the past two years, Pepsi’s stock price is down about 18 percent. It’s worth noting that PEP paid dividends of $3.275 per share, which results in a holding period return of negative 12 percent.

PEP is in the red, but it still outperformed the Dow and the S&P 500. Both lost about 30 percent for the same period. (View the 2-year chart of PEP vs. the Dow and the S&P 500)

Merck & Co. (Ticker: MRK) provides drugs for people and animals. Some of its most popular drugs include Singulair, Januvia and the vaccine, Gardasil. Merck was founded in 1891 and headquartered in Whitehouse Station, New Jersey.

MRK is included in the Dow and the S&P 500, and unfortunately, it has underperformed them both. Shares of Merck have lost over 40 percent of their value in the past two years. Merck paid dividends of $3.04 per share, providing its investors with a 6 percent cushion. (View the 2-year chart of MRK vs. the Dow and the S&P 500)

For the second time this week, we have two stocks in negative territory. But of the ten stocks covered, Merck was the only stock to perform worse than all three major indices.

Keep in mind, the returns quoted in this week’s posts only examine each stock’s performance for the 2-year holding period. Merck has actually outperformed the indices in the past 12 months.

To determine if a defensive stock suits you, determine your investment horizon, your goals and risk tolerance first.