Vanguard Consumer Staples ETF Outperforms S&P 500
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 45 minutes ago
0mins
Source: Fool
- Historical Returns: Since its inception in 1957, the S&P 500 has generated an average annual return of approximately 10%, leading Vanguard's founder John Bogle to recommend that investors simply buy index funds to simplify their investment strategy.
- Vanguard Consumer Staples ETF Performance: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 during the Great Recession and throughout 2022, primarily due to its focus on companies that provide non-discretionary goods, which tend to maintain stable sales during economic downturns.
- Portfolio Composition: VDC passively tracks the MSCI US IMI Consumer Staples 25/50 index, comprising 104 consumer staples stocks, with major holdings in large-cap companies like Walmart (16.2%), Costco (12.3%), and Procter & Gamble (9.1%), which dominate its portfolio.
- Long-Term Investment Comparison: While VDC serves as a strong defensive play during bear markets, its price has only risen 20% over the past decade compared to VOO's 80% increase, and with an expense ratio of 0.09% versus VOO's 0.03%, VDC may not be the best choice for long-term investors.
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Analyst Views on WMT
Wall Street analysts forecast WMT stock price to rise
26 Analyst Rating
25 Buy
1 Hold
0 Sell
Strong Buy
Current: 113.060
Low
119.00
Averages
125.75
High
136.00
Current: 113.060
Low
119.00
Averages
125.75
High
136.00
About WMT
Walmart Inc. is a technology-powered omnichannel retailer. The Company is engaged in the operation of retail and wholesale stores and clubs, as well as eCommerce Websites and mobile applications, located throughout the United States (U.S.), Africa, Canada, Central America, Chile, China, India and Mexico. It operates in three reportable segments: Walmart U.S., Walmart International and Sam's Club U.S. The Walmart U.S. segment includes the Company's mass merchandising concept in the U.S., as well as eCommerce, which includes omni-channel initiatives and certain other business offerings such as advertising services. The Walmart International segment consists of the Company's operations outside of the U.S. through its subsidiaries, as well as eCommerce and omni-channel initiatives. The Sam's Club U.S. segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Walmart's Expenses Grow Faster Than Expected
- Expense Growth Exceeds Expectations: Walmart reported that its expenses are growing faster than anticipated, which may impact future profitability and indicates challenges in cost control for the company.
- Investment Recommendation Shift: Despite Walmart's significant market presence, The Motley Fool's analyst team did not include it in their current list of top investment stocks, reflecting a cautious market sentiment regarding its future performance.
- Historical Return Comparison: Compared to previously recommended stocks like Netflix and Nvidia, which achieved returns of 462,983% and 1,375,447% respectively, Walmart has not demonstrated the same investment appeal, indicating a relative weakness in investor sentiment.
- Market Performance Discrepancy: With Stock Advisor's total average return at 995%, significantly surpassing the S&P 500's 212%, this further underscores Walmart's competitive disadvantage in the current market landscape.
See More
Vanguard Consumer Staples ETF Outperforms S&P 500
- Historical Returns: Since its inception in 1957, the S&P 500 has generated an average annual return of approximately 10%, leading Vanguard's founder John Bogle to recommend that investors simply buy index funds to simplify their investment strategy.
- Vanguard Consumer Staples ETF Performance: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 during the Great Recession and throughout 2022, primarily due to its focus on companies that provide non-discretionary goods, which tend to maintain stable sales during economic downturns.
- Portfolio Composition: VDC passively tracks the MSCI US IMI Consumer Staples 25/50 index, comprising 104 consumer staples stocks, with major holdings in large-cap companies like Walmart (16.2%), Costco (12.3%), and Procter & Gamble (9.1%), which dominate its portfolio.
- Long-Term Investment Comparison: While VDC serves as a strong defensive play during bear markets, its price has only risen 20% over the past decade compared to VOO's 80% increase, and with an expense ratio of 0.09% versus VOO's 0.03%, VDC may not be the best choice for long-term investors.
See More
Analysis of VDC ETF Performance in Bear Markets
- Defensive Investment Advantage: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 from 2007 to 2009 and throughout 2022, demonstrating its defensive investment advantage during economic downturns, particularly as demand for non-discretionary goods remains stable.
- Market Performance Comparison: Despite VDC's strong performance in bear markets, it has only risen 20% over the past decade, while the Vanguard S&P 500 ETF (VOO) surged about 80%, indicating that defensive stocks lose appeal during bull markets, prompting investors to seek higher growth assets.
- Expense Ratio Discrepancy: VDC's expense ratio stands at 0.09%, higher than VOO's 0.03%, which makes the latter more attractive to long-term investors, thereby impacting VDC's long-term appeal.
- Investment Strategy Recommendation: For short-term investors, VDC may present an attractive defensive option, but for those seeking long-term growth, allocating too much to VDC is unwise, as it is not designed to outperform the market.
See More
Opportunities in Dividend Stocks Amid Economic Challenges
- Walmart's Strong Performance: Walmart's Q1 2027 revenue grew by 7.3% year-over-year to $177.8 billion, with adjusted EPS rising 8.2% to $0.66, although its stock fell due to second-quarter guidance falling short of expectations, reflecting market caution about future performance.
- E-commerce Growth: Walmart's e-commerce sales surged 26% year-over-year, not only boosting overall sales but also providing higher-margin opportunities, particularly in advertising and third-party seller services, further enhancing its competitive edge.
- Visa and Mastercard's Market Position: Visa and Mastercard have established a duopoly in the payment network space, and despite facing regulatory pressures and market fluctuations, both maintain strong competitive advantages due to network effects, with Visa being the preferred payment method for merchants.
- Future Growth Potential: Both companies have significant growth potential in underdeveloped markets with lower credit card penetration, presenting higher risks but also greater upside, and their increasing free cash flow ensures the sustainability of their dividend policies, making them top long-term investment choices.
See More
Walmart's Stock Drop Presents Buying Opportunity
- Strong Performance Yet Stock Drop: Walmart's Q1 2027 revenue rose 7.3% year-over-year to $177.8 billion, with adjusted EPS increasing 8.2% to $0.66; however, the stock fell due to second-quarter guidance falling short of analyst expectations, highlighting market sensitivity to high valuations.
- E-commerce Growth Surge: Walmart's e-commerce sales grew 26% year-over-year in the latest quarter, significantly outpacing traditional retail, indicating the company's ability to capitalize on the shift to online shopping, which could enhance profits and market share.
- Stable Dividend Policy: As a 'Dividend King', Walmart has raised its dividend for 50 consecutive years, remaining resilient even in the current economic climate, suggesting that long-term holders could achieve superior returns, especially with reinvested dividends.
- Duopoly in Payment Industry: Visa and Mastercard dominate the payment network space, facing regulatory pressures and market challenges, yet both possess substantial market potential with a combined addressable market exceeding $11 trillion, making them solid long-term holdings.
See More
US Retailers Face Consumer Spending Pressure Amid Rising Gas Prices
- Changing Consumer Spending: While retailers like Dollar Tree and Walmart continue to see sales, consumer spending patterns are becoming more selective, prioritizing essentials and value-driven purchases, which is impacting overall retail performance as discretionary spending declines.
- Lower-Income Cutbacks: The CFO of Dollar General noted that core lower-income customers are cutting back on expenses, including food, while higher-income shoppers are increasingly turning to discount retailers, indicating a shift in consumer demographics and market pressures.
- Impact of Gas Prices on Spending: Analysts warn that if the national average gas price remains above $4.00 per gallon, discretionary spending could face increased pressure, particularly during the upcoming back-to-school and holiday shopping seasons, potentially affecting retailer revenues.
- K-Shaped Recovery: Despite strong spending from higher-income consumers on apparel and luxury beauty products, lower-income households are pulling back under inflationary pressures, highlighting a K-shaped recovery in U.S. consumer spending that retailers must navigate carefully.
See More
Walmart's Expenses Grow Faster Than Expected
- Expense Growth Exceeds Expectations: Walmart reported that its expenses are growing faster than anticipated, which may impact future profitability and indicates challenges in cost control for the company.
- Investment Recommendation Shift: Despite Walmart's significant market presence, The Motley Fool's analyst team did not include it in their current list of top investment stocks, reflecting a cautious market sentiment regarding its future performance.
- Historical Return Comparison: Compared to previously recommended stocks like Netflix and Nvidia, which achieved returns of 462,983% and 1,375,447% respectively, Walmart has not demonstrated the same investment appeal, indicating a relative weakness in investor sentiment.
- Market Performance Discrepancy: With Stock Advisor's total average return at 995%, significantly surpassing the S&P 500's 212%, this further underscores Walmart's competitive disadvantage in the current market landscape.
See More
Vanguard Consumer Staples ETF Outperforms S&P 500
- Historical Returns: Since its inception in 1957, the S&P 500 has generated an average annual return of approximately 10%, leading Vanguard's founder John Bogle to recommend that investors simply buy index funds to simplify their investment strategy.
- Vanguard Consumer Staples ETF Performance: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 during the Great Recession and throughout 2022, primarily due to its focus on companies that provide non-discretionary goods, which tend to maintain stable sales during economic downturns.
- Portfolio Composition: VDC passively tracks the MSCI US IMI Consumer Staples 25/50 index, comprising 104 consumer staples stocks, with major holdings in large-cap companies like Walmart (16.2%), Costco (12.3%), and Procter & Gamble (9.1%), which dominate its portfolio.
- Long-Term Investment Comparison: While VDC serves as a strong defensive play during bear markets, its price has only risen 20% over the past decade compared to VOO's 80% increase, and with an expense ratio of 0.09% versus VOO's 0.03%, VDC may not be the best choice for long-term investors.
See More
Analysis of VDC ETF Performance in Bear Markets
- Defensive Investment Advantage: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 from 2007 to 2009 and throughout 2022, demonstrating its defensive investment advantage during economic downturns, particularly as demand for non-discretionary goods remains stable.
- Market Performance Comparison: Despite VDC's strong performance in bear markets, it has only risen 20% over the past decade, while the Vanguard S&P 500 ETF (VOO) surged about 80%, indicating that defensive stocks lose appeal during bull markets, prompting investors to seek higher growth assets.
- Expense Ratio Discrepancy: VDC's expense ratio stands at 0.09%, higher than VOO's 0.03%, which makes the latter more attractive to long-term investors, thereby impacting VDC's long-term appeal.
- Investment Strategy Recommendation: For short-term investors, VDC may present an attractive defensive option, but for those seeking long-term growth, allocating too much to VDC is unwise, as it is not designed to outperform the market.
See More
Opportunities in Dividend Stocks Amid Economic Challenges
- Walmart's Strong Performance: Walmart's Q1 2027 revenue grew by 7.3% year-over-year to $177.8 billion, with adjusted EPS rising 8.2% to $0.66, although its stock fell due to second-quarter guidance falling short of expectations, reflecting market caution about future performance.
- E-commerce Growth: Walmart's e-commerce sales surged 26% year-over-year, not only boosting overall sales but also providing higher-margin opportunities, particularly in advertising and third-party seller services, further enhancing its competitive edge.
- Visa and Mastercard's Market Position: Visa and Mastercard have established a duopoly in the payment network space, and despite facing regulatory pressures and market fluctuations, both maintain strong competitive advantages due to network effects, with Visa being the preferred payment method for merchants.
- Future Growth Potential: Both companies have significant growth potential in underdeveloped markets with lower credit card penetration, presenting higher risks but also greater upside, and their increasing free cash flow ensures the sustainability of their dividend policies, making them top long-term investment choices.
See More
Walmart's Stock Drop Presents Buying Opportunity
- Strong Performance Yet Stock Drop: Walmart's Q1 2027 revenue rose 7.3% year-over-year to $177.8 billion, with adjusted EPS increasing 8.2% to $0.66; however, the stock fell due to second-quarter guidance falling short of analyst expectations, highlighting market sensitivity to high valuations.
- E-commerce Growth Surge: Walmart's e-commerce sales grew 26% year-over-year in the latest quarter, significantly outpacing traditional retail, indicating the company's ability to capitalize on the shift to online shopping, which could enhance profits and market share.
- Stable Dividend Policy: As a 'Dividend King', Walmart has raised its dividend for 50 consecutive years, remaining resilient even in the current economic climate, suggesting that long-term holders could achieve superior returns, especially with reinvested dividends.
- Duopoly in Payment Industry: Visa and Mastercard dominate the payment network space, facing regulatory pressures and market challenges, yet both possess substantial market potential with a combined addressable market exceeding $11 trillion, making them solid long-term holdings.
See More
US Retailers Face Consumer Spending Pressure Amid Rising Gas Prices
- Changing Consumer Spending: While retailers like Dollar Tree and Walmart continue to see sales, consumer spending patterns are becoming more selective, prioritizing essentials and value-driven purchases, which is impacting overall retail performance as discretionary spending declines.
- Lower-Income Cutbacks: The CFO of Dollar General noted that core lower-income customers are cutting back on expenses, including food, while higher-income shoppers are increasingly turning to discount retailers, indicating a shift in consumer demographics and market pressures.
- Impact of Gas Prices on Spending: Analysts warn that if the national average gas price remains above $4.00 per gallon, discretionary spending could face increased pressure, particularly during the upcoming back-to-school and holiday shopping seasons, potentially affecting retailer revenues.
- K-Shaped Recovery: Despite strong spending from higher-income consumers on apparel and luxury beauty products, lower-income households are pulling back under inflationary pressures, highlighting a K-shaped recovery in U.S. consumer spending that retailers must navigate carefully.
See More
