Up to date on June thirteenth, 2025 by Bob Ciura
On the earth of investing, volatility issues. Traders are reminded of this each time there’s a downturn within the broader market and particular person shares which might be extra unstable than others expertise monumental swings in value.
Volatility is a proxy for threat; extra volatility typically means a riskier portfolio. The volatility of a safety or portfolio towards a benchmark is known as Beta.
In brief, Beta is measured through a method that calculates the value threat of a safety or portfolio towards a benchmark, which is often the broader market as measured by the S&P 500.
Right here’s tips on how to learn inventory betas:
A beta of 1.0 means the inventory strikes equally with the S&P 500
A beta of two.0 means the inventory strikes twice as a lot because the S&P 500
A beta of 0.0 means the shares strikes don’t correlate with the S&P 500
A beta of -1.0 means the inventory strikes exactly reverse the S&P 500
Apparently, low beta shares have traditionally outperformed the market… However extra on that later.
You may obtain a spreadsheet of the 100 lowest beta S&P shares (together with necessary monetary metrics like price-to-earnings ratios and dividend yields) beneath:
This text will talk about beta extra totally, why low-beta shares are inclined to outperform, and supply a dialogue of the 5 lowest-beta dividend shares within the Positive Evaluation Analysis Database.
The desk of contents beneath permits for simple navigation.
Desk of Contents
The Proof for Low Beta Shares Outperformance
Beta is useful in understanding the general value threat degree for buyers throughout market downturns specifically. The decrease the Beta worth, the much less volatility the inventory or portfolio ought to exhibit towards the benchmark.
That is useful for buyers for apparent causes, significantly these which might be near or already in retirement, as drawdowns must be comparatively restricted towards the benchmark.
Importantly, low or excessive Beta merely measures the dimensions of the strikes a safety makes; it doesn’t imply essentially that the value of the safety stays practically fixed.
Securities may be low Beta and nonetheless be caught in long-term downtrends, so that is merely yet another instrument buyers can use when constructing a portfolio.
The standard knowledge would recommend that decrease Beta shares ought to underperform the broader markets throughout uptrends and outperform throughout downtrends, providing buyers decrease potential returns in alternate for decrease threat.
Nonetheless, historical past would recommend that merely isn’t the case.
Certainly, this paper from Harvard Enterprise Faculty means that not solely do low Beta shares not underperform the broader market over time – together with all market circumstances – they really outperform.
A protracted-term examine whereby the shares with the bottom 30% of Beta scores within the US had been pitted towards shares with the very best 30% of Beta scores steered that low Beta shares outperform by a number of share factors yearly.
Over time, this form of outperformance can imply the distinction between a snug retirement and having to proceed working.
Whereas low Beta shares aren’t a panacea, the case for his or her outperformance over time – and with decrease threat – is sort of compelling.
How To Calculate Beta
The method to calculate a safety’s Beta is pretty easy. The outcome, expressed as a quantity, exhibits the safety’s tendency to maneuver with the benchmark.
For instance, a Beta worth of 1.0 implies that the safety in query ought to transfer in lockstep with the benchmark. A Beta of two.0 implies that strikes within the safety must be twice as giant in magnitude because the benchmark and in the identical path, whereas a adverse Beta implies that actions within the safety and benchmark have a tendency to maneuver in reverse instructions or are negatively correlated.
Associated: The S&P 500 Shares With Detrimental Beta.
In different phrases, negatively correlated securities can be anticipated to rise when the general market falls, or vice versa. A small worth of Beta (one thing lower than 1.0) signifies a inventory that strikes in the identical path because the benchmark, however with smaller relative adjustments.
Right here’s a take a look at the method:
The numerator is the covariance of the asset in query with the market, whereas the denominator is the variance of the market. These complicated-sounding variables aren’t truly that troublesome to compute – particularly in Excel.
Moreover, Beta may also be calculated because the correlation coefficient of the safety in query and the market, multiplied by the safety’s commonplace deviation divided by the market’s commonplace deviation.
Lastly, there’s a significantly simplified method to calculate Beta by manipulating the capital asset pricing mannequin method (extra on Beta and the capital asset pricing mannequin later on this article).
Right here’s an instance of the info you’ll have to calculate Beta:
Threat-free price (sometimes Treasuries at the least two years out)
Your asset’s price of return over some interval (sometimes one yr to 5 years)
Your benchmark’s price of return over the identical interval because the asset
To indicate tips on how to use these variables to do the calculation of Beta, we’ll assume a risk-free price of two%, our inventory’s price of return of seven% and the benchmark’s price of return of 8%.
You begin by subtracting the risk-free price of return from each the safety in query and the benchmark. On this case, our asset’s price of return internet of the risk-free price can be 5% (7% – 2%).
The identical calculation for the benchmark would yield 6% (8% – 2%).
These two numbers – 5% and 6%, respectively – are the numerator and denominator for the Beta method. 5 divided by six yields a worth of 0.83, and that’s the Beta for this hypothetical safety.
On common, we’d anticipate an asset with this Beta worth to be 83% as unstable because the benchmark.
Interested by it one other method, this asset must be about 17% much less unstable than the benchmark whereas nonetheless having its anticipated returns correlated in the identical path.
Beta & The Capital Asset Pricing Mannequin (CAPM)
The Capital Asset Pricing Mannequin, or CAPM, is a standard investing method that makes use of the Beta calculation to account for the time worth of cash in addition to the risk-adjusted returns anticipated for a specific asset.
Beta is an integral part of the CAPM as a result of with out it, riskier securities would seem extra favorable to potential buyers. Their threat wouldn’t be accounted for within the calculation.
The CAPM method is as follows:
The variables are outlined as:
ERi = Anticipated return of funding
Rf = Threat-free price
βi = Beta of the funding
ERm = Anticipated return of market
The chance-free price is identical as within the Beta method, whereas the Beta that you just’ve already calculated is just positioned into the CAPM method. The anticipated return of the market (or benchmark) is positioned into the parentheses with the market threat premium, which can also be from the Beta method. That is the anticipated benchmark’s return minus the risk-free price.
To proceed our instance, right here is how the CAPM truly works:
ER = 2% + 0.83(8% – 2%)
On this case, our safety has an anticipated return of 6.98% towards an anticipated benchmark return of 8%. Which may be okay relying upon the investor’s targets because the safety in query ought to expertise much less volatility than the market due to its Beta of lower than 1.
Whereas the CAPM actually isn’t excellent, it’s comparatively straightforward to calculate and offers buyers a method of comparability between two funding options.
Now, we’ll check out 5 shares that not solely supply buyers low Beta scores, however engaging potential returns as properly.
Evaluation On The Prime 5 Low Beta Shares
The next 5 low beta shares have the bottom (however constructive) Beta values, in ascending order from lowest to highest. Additionally they pay dividends to shareholders.
We centered on Betas above 0, as we’re nonetheless searching for shares which might be positively correlated with the broader market:
5. Kraft-Heinz Co. (KHC)
Kraft-Heinz is a processed meals and drinks firm which owns a product portfolio that features meals merchandise equivalent to condiments, sauces, cheese & dairy, frozen & chilled meals, and toddler food regimen & vitamin.
When The Kraft-Heinz Firm reported its first quarter earnings outcomes, the corporate reported that its revenues totaled $6.0 billion through the quarter, which was down 6.4% in comparison with the revenues that Kraft-Heinz generated through the earlier yr’s interval.
This was barely worse than what the analyst group had anticipated, because the consensus estimate was missed by $20 million. Kraft-Heinz’ natural gross sales had been down by 4.7%.
Kraft-Heinz generated earnings-per-share of $0.62 through the first quarter, which was above the consensus estimate. Earnings-per-share had been down 10% versus the earlier yr’s quarter, which was a weaker outcome in comparison with the earlier quarter, when earnings-per-share had been up 8% year-over-year.
Kraft-Heinz’ administration acknowledged that they see natural internet gross sales declining by round 2.5% in 2025, whereas administration is forecasting earnings-per-share to come back in between $2.51 and $2.67 for the present yr. This may imply a decline of round 15% versus the earlier yr.
Click on right here to obtain our most up-to-date Positive Evaluation report on KHC (preview of web page 1 of three proven beneath):
4. Northrup Grumman Company (NOC)
Northrop Grumman Company is likely one of the 5 largest U.S. aerospace and protection contractors based mostly on income.
The corporate studies 4 enterprise segments: Aeronautics Methods (plane and UAVs), Mission Methods (radars, sensors and techniques for surveillance and focusing on), Protection Methods (sustainment and modernization, directed vitality, tactical weapons), and Area Methods (missile protection, house techniques, hypersonics and house launchers).
The corporate had income of over $41.0B in 2024.
Northrop Grumman reported outcomes for Q1 FY 2025 on April twenty second, 2025. Firm-wide income declined 7% to $9.468 billion and diluted earnings per share fell 47% to $3.32 on a year-over-year foundation on a loss provision for the B-21, decrease volumes, and better rates of interest.
Income for Aeronautics Methods fell 8% to $2.814 billion on account of decrease volumes in B-21, F-35, and restricted applications. Income for Protection Methods grew 4% on account of greater gross sales within the Sentinel and ammunition applications, offset by the SiAW program.
The whole backlog is a document ~$92.8B on the finish of the quarter of which $39.9B is funded. The agency received $10.8B in contract awards within the quarter together with giant ones for restricted applications and the F-35.
The corporate up to date steering to $42.0B to $42.5B in gross sales and $24.95 to $25.35 earnings per share in 2025.
Click on right here to obtain our most up-to-date Positive Evaluation report on NOC (preview of web page 1 of three proven beneath):
3. Conagra Manufacturers (CAG)
Conagra has well-known manufacturers like Slim Jim, Wholesome Alternative, Marie Callender’s, Orville Redenbacher’s, Reddi Whip, Birds Eye, Vlasic, Hunt’s, and PAM.
On April third, 2025, Conagra reported third quarter outcomes for the interval ending February 25, 2025. For the quarter, internet gross sales declined 6.3% year-over-year to $2.8 billion, the results of a 5.2% discount of natural internet gross sales, a 0.7% decline on account of foreign money alternate , and a adverse impression of -0.4% on account of M&A.
Quantity declined 3.1%. Adjusted EPS decreased 26% to $0.51, lacking analyst estimates by $0.02. At quarter-end, the corporate had internet debt of $8.1 billion, and a internet leverage ratio of three.59X.
Conagra reiterated its fiscal 2025 steering, anticipating natural internet gross sales to say no by -2% in comparison with FY 2024. Adjusted working margin is more likely to are available at 14.4%, and adjusted EPS is predicted to say no from FY 2024 to $2.35.
Click on right here to obtain our most up-to-date Positive Evaluation report on CAG (preview of web page 1 of three proven beneath):
2. Campbell Soup Co. (CPB)
Campbell Soup Firm is a multinational meals firm headquartered in Camden, N.J. The corporate manufactures and markets branded comfort meals merchandise, equivalent to soups, easy meals, drinks, snacks, and packaged recent meals.
The corporate’s portfolio focuses on two particular companies: Campbell Snacks, and Campbell Meals and Drinks. Campbell generated annual gross sales of $9.6 billion in fiscal 2024.
On March 12, 2024, Campbell closed on its acquisition of Sovos Manufacturers (SOVO) for $23 per share in money, which represented a complete enterprise worth of $2.7 billion, and was funded by issuing new debt. Sovos is a frontrunner in excessive progress premium Italian sauces, and owns the market-leading Rao’s model.
Campbell Soup reported second quarter FY 2025 outcomes on March fifth, 2025. Web gross sales for the quarter improved by 9% year-over-year to $2.7 billion. This enhance was largely a results of the Sovos Manufacturers acquisition. Adjusted EPS was 8% decrease year-over-year at $0.74 for the quarter, which beat expectations by two cents.
The corporate repurchased $56 million price of shares in H1. There stays $301 million remaining beneath the present $500 million share repurchase program, which is along with the prevailing $205 million remaining on its anti-dilutive share repurchase program.
Management up to date its full-year fiscal 2025 steering. Administration now estimates that in fiscal 2025, Campbell’s adjusted earnings per share will probably be down 1% to 4%.
Click on right here to obtain our most up-to-date Positive Evaluation report on CPB (preview of web page 1 of three proven beneath):
1. Normal Mills (GIS)
Normal Mills is a packaged meals large, with greater than 100 manufacturers and operations in additional than 100 international locations. Normal Mills has not reduce its dividend for 125 consecutive years.
In mid-March, Normal Mills reported (3/19/25) outcomes for Q3-2025. Web gross sales and natural gross sales fell -5% every over the prior yr’s quarter, primarily on account of retailer stock reductions. It was the second-worst decline within the final 5 years.
Gross margin expanded from 33.5% to 33.9%, as price financial savings offset enter inflation. Adjusted earnings-per-share decreased -15%, from $1.18 to $1.00, however exceeded the analysts’ consensus by $0.04.
Normal Mills is dealing with powerful comparisons, because the pandemic has subsided. It generates 85% of its gross sales from at-home meals demand. Additionally it is dealing with excessive price inflation, which is more likely to persist for some time. As well as, it’s at present investing in its pet enterprise to reinvigorate progress, on the expense of short-term earnings.
Consequently, the corporate lowered its already cautious steering for fiscal 2025. It expects a 1.5%-2% decline in natural gross sales and a 7%-8% decline in earnings per-share (vs. a 2% decline in earlier steering).
Click on right here to obtain our most up-to-date Positive Evaluation report on GIS (preview of web page 1 of three proven beneath):
Closing Ideas
Traders should take threat into consideration when choosing from potential investments. In spite of everything, if two securities are in any other case related when it comes to anticipated returns however one affords a a lot decrease Beta, the investor would do properly to pick out the low Beta safety as they could supply higher risk-adjusted returns.
Utilizing Beta may also help buyers decide which securities will produce extra volatility than the broader market and which of them could assist diversify a portfolio, equivalent to those listed right here.
The 5 shares we’ve checked out not solely supply low Beta scores, however additionally they supply engaging dividend yields. Sifting by way of the immense variety of shares out there for buy to buyers utilizing standards like these may also help buyers discover the very best shares to go well with their wants.
At Positive Dividend, we regularly advocate for investing in corporations with a excessive chance of accelerating their dividends each yr.
If that technique appeals to you, it might be helpful to flick through the next databases of dividend progress shares:
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