Todd Shriber, The Motley Fool
4 min read
It was a red October for the artificial intelligence (AI) trade as the tech-heavy Nasdaq-100 index slumped by 6.6%. That shift didn’t chase investors entirely out of the market, though. Rather, they rotated away from tech into the friendly confines of consumer staples.
In fact, some of the most familiar consumer defensive stocks are posting tech-esque returns of late. Just look at Colgate-Palmolive (NYSE: CL). A stock that many market participants know primarily as a Dividend King — thanks to its payout-hiking streak of at least 50 years — delivered an October performance that would make an AI stock blush, surging by 12.3%.
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That rally expanded Colgate-Palmolive’s year-to-date gain to 23.4%, a sizable lead over both its chief rival Procter & Gamble and the sector bellwether Vanguard Consumer Staples exchange-traded fund. The stock’s 2026 sturdiness is one reason buy-and-hold investors should consider shares of the toothpaste and soap giant before the end of this year.
An ideal “hold forever” stock
Some stocks are meant to be flirted with while others are worthy of dating, but there’s also a group to which investors can make long-term commitments. Colgate-Palmolive is in that camp. Sure, a dividend-hiking streak spanning 63 years bolsters the case for this stock as a long-term investment, but there’s more to the story.
Yes, consumer staples stocks are generating so much hoopla of late that the sector is, based on price-to-earnings (P/E) ratios, pricier than the information technology sector, but with Colgate-Palmolive, that higher cost of admission may prove justifiable. Obviously, it offers the benefit of one of the most dependably growing dividends in the U.S., along with all the volatility-reducing properties commonly associated with consumer defensive stocks.
For buy-and-hold investors, Colgate-Palmolive features other attractive points. Some of those market participants may still be too heavily allocated to growth stocks, so sprinkling some defensive stocks into their portfolios would be a smart way to enhance their diversification. And for investors sitting on cash as they fret about the AI trade’s effects on the broader market, Colgate-Palmolive offers superior long-term return prospects relative to money market accounts and short-term bonds.
