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3 Consumer Goods Stocks We Couldn't Live Without

By Anders Bylund, Bob Ciura, and Daniel B. Kline - Sep 12, 2015 at 2:00PM

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Could you go a week without contributing to PepsiCo's coffers? How about Walt Disney or -- perish the thought! -- Starbucks? No? Well, that's okay. You are not alone.

Consumer goods brands come and go. The indispensable giants of ten or twenty years ago might not exist today, or may have been reduced to a shadow of their former glory.

But some consumer goods names aren't going away. We asked a panel of Motely Fool contributors what names from this sector they couldn't live without today, and they came up with a bushel of classics.

Walt Disney (DIS 1.64%) and PepsiCo (PEP 0.69%) have built their brand cachets over decades of hard work and genius-level marketing. Starbucks (SBUX -0.33%) is a bit newer on the scene, but no less integral to modern day-to-day living.

That's the ten-second elevator pitch. Stick around, and you'll get a lot more detail about these consumer goods titans, and why they seem nearly as important as fresh air and clean water these days.

Daniel Kline (Starbucks): While Starbucks addiction may not require rehab, it's a serious enough thing that Googling it produces nearly 1 million results.

From quizzes in women's magazines to listicles and other silliness, the idea that the coffee chain is something people can't live without has become an anecdotal fact of life. But the biggest proof that Starbucks has become an addiction, something people can't give up even though they should, is that we continue to shop there even though we know it's not a good idea.

Starbucks is expensive. In most places it's possible to get a fresh-brewed cup of coffee for under $1 and certainly under $2 while a grande (medium) at my local Starbucks in the Hartford, Connecticut area costs $2.20. That, of course, is the tip of the iceberg as most people opt for pricier drinks that cost in the range of $4.50 to $6.

Spending that much on coffee on a regular basis would have seemed ridiculous not so long ago. Now, we rationalize it as "an affordable luxury" or kid ourselves that we will go back to brewing our own tomorrow.

I've seen people in my office come to work carrying multiple Starbucks cups -- despite the fact that we have two different single-cup coffee brewers including a Starbucks Verismo, which makes lattes much like the ones in the store. These are people passing up an abundant selection of free coffee along with an array of flavor shots, sweeteners, and other amenities in favor of spending money.

I'd laugh at it, except I've done it, too. Starbucks makes no sense on a daily basis, but it has become something many of us can't live without.

Anders Bylund (Walt Disney): If you have kids or grandkids, you already know why you need Disney in your life. The House of Mouse produces some of the most effective child care tools on the market, from high-quality movies and popular TV shows to lunch boxes, toys, and theme park rides emblazoned with their favorite characters.

It doesn't even matter what kind of child we're talking about. Little girls have their favorite Disney princesses, ranging from old-school Snow White to recent superstars Anna and Elsa. Boys can focus on Marvel superheroes like Spider-Man or The Hulk. Coming up around the bend, Disney is about to steamroll the market with a fresh Star Wars title that frankly looks amazing in early previews.

Disney knows how to milk a character-based brand like no other company on the planet. It's a full-court press, and built on an amazing cast of cartoon personalities built over many decades. The Lucasfilm division's Star Wars assets brought in a wealth of live-action hero worship, and Disney will make the most of it in every possible way.

Last week's brand-soaked launch of the new Star Wars movie's toy sales was a smash hit by all accounts. Did I mention that Disney will start building entire Star Wars-flavored theme parks in Florida and California next year? Yeah. That's coming.

Disney is such an essential part of our culture these days -- both in American and around the world -- that many of us simply cannot imagine life without these colorful, heroic, annoying, and/or adorable characters anymore. And the company is doing its level best to keep it that way.

Bob Ciura (PepsiCo): Diversified food and beverage company PepsiCo is a consumer stock I can't live without, because I use a number of the company's products on a daily basis. I'd venture to guess that millions of households across America currently have at least one of PepsiCo's products in the cupboard.

PepsiCo has a large brand portfolio including its namesake sodas, Frito-Lay snacks, and Gatorade. In addition, PepsiCo has several healthy brands like Quaker, as well as Sabra, Aquafina, and Naked juice.

Moreover, I can't imagine living without PepsiCo's stock in my portfolio. Not only do I love PepsiCo's products, but as a die-hard dividend investor, I love owning the stock.

PepsiCo is a slow-and-steady company that generates reliable growth. Its organic revenue and core earnings per share rose 5% and 11% last quarter, year over year. With its rising profits, the company can easily afford to steadily increase its dividend. In fact, PepsiCo has raised its dividend for 43 years in a row, including a solid 7% raise earlier this year. PepsiCo's annualized dividends per share have grown at 10% compound annual rate over the past 10 years.

As a result, I look forward to many decades of having PepsiCo's products in my home, and its stock in my portfolio.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$103.26 (1.64%) $1.67
Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$72.48 (-0.33%) $0.24
Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$168.97 (0.69%) $1.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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