Protect Your Portfolio From Market Volatility With These 5 Low-Beta Dividend Stocks

With unemployment spiking to its highest levels in three years, the unwinding of the yen carry trade and the Middle East still mired in continuing geopolitical conflicts, markets have been caught in a perfect storm of surging uncertainty this August. As a result, the market's “fear gauge,” the Cboe Volatility Index ($VIX), recently spiked to its highest levels since the early days of the pandemic. While the VIX has cooled from those highs, it's still trading close to the 20 level - suggesting there's still an inflated level of fear priced into the market.

As this week's inflation data lingers right around the corner, investors who are feeling on edge can consider low-beta stocks as a relative safe haven during periods of heightened market uncertainty. Low-beta stocks are those with a beta lower than 1.00, which means that these stocks realize lesser movement in their prices compared to the broad-market indices. In other words, these names are less volatile than most.

Recently, analysts at Bank of America (BAC) released a list of high-quality, low-beta stocks for investors to consider. Out of their lineup, here's a closer look at five stocks that pay dividends to shareholders, and are consensus “Buy”-rated by Wall Street analysts.

#1. Kroger

Founded in 1883, Kroger (KR) is a behemoth in the grocery retail industry. It operates supermarkets and multi-department stores under various banners, offering a wide range of products while also providing fuel and convenience store services through its Kroger Fuel Center and convenience store chains. With a beta of 0.45, the company's market cap currently stands at $38.9 billion.

KR stock is up 17.2% on a YTD basis, and offers a dividend yield of 2.37%.

Overall, analysts have deemed KR stock a “Moderate Buy,” with a mean target price of $58.80, which indicates an upside potential of about 9.3% from current levels. Out of 18 analysts covering the stock, 11 have a “Strong Buy” rating, 6 have a “Hold” rating, and 1 has a “Strong Sell” rating.

#2. Xcel Energy

Formed in 1998 through the merger of Northern States Power Company (NSP) and Public Service Company of Colorado, Xcel Energy (XEL) is a large, regulated utility company that provides electricity and natural gas service to customers in eight Midwestern and Southwestern states. Its primary business involves generating, transmitting, and distributing electricity and natural gas (NGU24). The company's market cap is currently at $32.2 billion.

XEL stock, with a beta of 0.37, is down 6.7% on a YTD basis. Notably, the stock offers a dividend yield of 3.78%.

Analysts have an average rating of “Moderate Buy” for XEL stock, with a mean target price of $64.08. This denotes an upside potential of about 10.4% from current levels. Out of 14 analysts covering the stock, 7 have a “Strong Buy” rating and 7 have a “Hold” rating.

#3. Packaging Corp of America

Packaging Corporation of America (PKG) is a leading producer of containerboard and corrugated packaging products. The company is primarily engaged in the manufacture of uncoated free sheet and cardboard products. Its products are used in various industries, including food, beverage, consumer goods, and industrial packaging. With a current market cap of $17.4 billion, the stock has a beta of 0.77.

PKG stock is up 17.4% on a YTD basis, and it offers a dividend yield of 2.58%.

Analysts rate PKG stock a “Moderate Buy” overall, with a mean target price of $207.17, which indicates an upside potential of roughly 6.5% from current levels. Out of 7 analysts covering the stock, 3 have a “Strong Buy” rating, and 4 have a “Hold” rating.

#4. Kimberly-Clark Corp

Based out of Dallas and founded in 1872, Kimberly-Clark Corp (KMB) is a global leader in the consumer products industry, specializing in personal care and tissue products. The company's primary focus lies in producing and marketing consumer products, including personal care products, and tissue products. The company currently commands a market cap of $47.2 billion.

KMB stock is up 14.1% on a YTD basis. The stock offers a dividend yield of 3.48% and has a beta of 0.37.

KMB stock has an average rating of “Moderate Buy,” with a mean target price of $146.67, which indicates an upside potential of about 5.6% from current levels. Out of 19 analysts covering the stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 10 have a “Hold” rating, and 2 have a “Strong Sell” rating.

#5. PepsiCo

Global beverages giant PepsiCo (PEP) has been refreshing consumers for well over a century now. Founded in 1898 in New York, Pepsi has gone on to become one of the largest food and beverage companies in the world, with operations in over 200 countries and territories. PepsiCo's portfolio of brands includes Pepsi, Diet Pepsi, Mountain Dew, Gatorade, Tropicana, Quaker, Frito-Lay, and Doritos. 

With its current market cap hovering around $236.9 billion, Pepsi stock is up 1.4% on a YTD basis, and has a beta of 0.52.

On average, analysts have assigned a rating of “Moderate Buy” for PEP stock, with a mean target price of $186.06, which denotes an upside potential of about 7.7% from current levels. Out of 18 analysts covering the stock, 10 have a “Strong Buy” rating, and 8 have a “Hold” rating.