Why FMCG stocks are considered a defensive investment
What Are Defensive Investments?
– Defensive investments are assets that remain stable during economic downturns. – FMCG stocks are a prime example, offering resilience and steady returns.
Essential Nature of FMCG Products
– FMCG companies produce essentials like food, beverages, and personal care items. – These products see consistent demand regardless of economic conditions.
Consistent Cash Flows
– FMCG companies have robust cash flows due to high product turnover. – Stable revenues translate into dependable dividend payouts for investors.
Resilience During Economic Downturns
– While other sectors may face steep declines, FMCG stocks tend to remain stable. – Companies like Hindustan Unilever and Nestlé India thrive even during recessions.
Long-Term Growth Prospects
– FMCG stocks offer consistent growth backed by expanding urban and rural markets. – Ideal for conservative investors looking for low-risk, long-term returns.