Updated on May 12th, 2025 by Bob Ciura
In the world of investing, volatility matters. Investors are reminded of this every time there is a downturn in the broader market and individual stocks that are more volatile than others experience enormous swings in price.
Volatility is a proxy for risk; more volatility generally means a riskier portfolio. The volatility of a security or portfolio against a benchmark is called Beta.
In short, Beta is measured via a formula that calculates the price risk of a security or portfolio against a benchmark, which is typically the broader market as measured by the S&P 500.
Here’s how to read stock betas:
- A beta of 1.0 means the stock moves equally with the S&P 500
- A beta of 2.0 means the stock moves twice as much as the S&P 500
- A beta of 0.0 means the stocks moves don’t correlate with the S&P 500
- A beta of -1.0 means the stock moves precisely opposite the S&P 500
Interestingly, low beta stocks have historically outperformed the market… But more on that later.
You can download a spreadsheet of the 100 lowest beta S&P stocks (along with important financial metrics like price-to-earnings ratios and dividend yields) below:
This article will discuss beta more thoroughly, why low-beta stocks tend to outperform, and provide a discussion of the 5 lowest-beta dividend stocks in the Sure Analysis Research Database.
The table of contents below allows for easy navigation.
Table of Contents
- The Evidence for Low Beta Outperformance
- How To Calculate Beta
- Beta & The Capital Asset Pricing Model (CAPM)
- Analysis On The Top 5 Low Beta Stocks
- Final Thoughts
The Evidence for Low Beta Stocks Outperformance
Beta is helpful in understanding the overall price risk level for investors during market downturns in particular. The lower the Beta value, the less volatility the stock or portfolio should exhibit against the benchmark.
This is beneficial for investors for obvious reasons, particularly those that are close to or already in retirement, as drawdowns should be relatively limited against the benchmark.
Importantly, low or high Beta simply measures the size of the moves a security makes; it does not mean necessarily that the price of the security stays nearly constant.
Securities can be low Beta and still be caught in long-term downtrends, so this is simply one more tool investors can use when building a portfolio.
The conventional wisdom would suggest that lower Beta stocks should underperform the broader markets during uptrends and outperform during downtrends, offering investors lower prospective returns in exchange for lower risk.
However, history would suggest that simply isn’t the case.
Indeed, this paper from Harvard Business School suggests that not only do low Beta stocks not underperform the broader market over time – including all market conditions – they actually outperform.
A long-term study wherein the stocks with the lowest 30% of Beta scores in the US were pitted against stocks with the highest 30% of Beta scores suggested that low Beta stocks outperform by several percentage points annually.
Over time, this sort of outperformance can mean the difference between a comfortable retirement and having to continue working.
While low Beta stocks aren’t a panacea, the case for their outperformance over time – and with lower risk – is quite compelling.
How To Calculate Beta
The formula to calculate a security’s Beta is fairly straightforward. The result, expressed as a number, shows the security’s tendency to move with the benchmark.
For example, a Beta value of 1.0 means that the security in question should move in lockstep with the benchmark. A Beta of 2.0 means that moves in the security should be twice as large in magnitude as the benchmark and in the same direction, while a negative Beta means that movements in the security and benchmark tend to move in opposite directions or are negatively correlated.
Related: The S&P 500 Stocks With Negative Beta.
In other words, negatively correlated securities would be expected to rise when the overall market falls, or vice versa. A small value of Beta (something less than 1.0) indicates a stock that moves in the same direction as the benchmark, but with smaller relative changes.
Here’s a look at the formula:
The numerator is the covariance of the asset in question with the market, while the denominator is the variance of the market. These complicated-sounding variables aren’t actually that difficult to compute – especially in Excel.
Additionally, Beta can also be calculated as the correlation coefficient of the security in question and the market, multiplied by the security’s standard deviation divided by the market’s standard deviation.
Finally, there’s a greatly simplified way to calculate Beta by manipulating the capital asset pricing model formula (more on Beta and the capital asset pricing model later in this article).
Here’s an example of the data you’ll need to calculate Beta:
- Risk-free rate (typically Treasuries at least two years out)
- Your asset’s rate of return over some period (typically one year to five years)
- Your benchmark’s rate of return over the same period as the asset
To show how to use these variables to do the calculation of Beta, we’ll assume a risk-free rate of 2%, our stock’s rate of return of 7% and the benchmark’s rate of return of 8%.
You start by subtracting the risk-free rate of return from both the security in question and the benchmark. In this case, our asset’s rate of return net of the risk-free rate would be 5% (7% – 2%).
The same calculation for the benchmark would yield 6% (8% – 2%).
These two numbers – 5% and 6%, respectively – are the numerator and denominator for the Beta formula. Five divided by six yields a value of 0.83, and that is the Beta for this hypothetical security.
On average, we’d expect an asset with this Beta value to be 83% as volatile as the benchmark.
Thinking about it another way, this asset should be about 17% less volatile than the benchmark while still having its expected returns correlated in the same direction.
Beta & The Capital Asset Pricing Model (CAPM)
The Capital Asset Pricing Model, or CAPM, is a common investing formula that utilizes the Beta calculation to account for the time value of money as well as the risk-adjusted returns expected for a particular asset.
Beta is an essential component of the CAPM because without it, riskier securities would appear more favorable to prospective investors. Their risk wouldn’t be accounted for in the calculation.
The CAPM formula is as follows:
The variables are defined as:
- ERi = Expected return of investment
- Rf = Risk-free rate
- βi = Beta of the investment
- ERm = Expected return of market
The risk-free rate is the same as in the Beta formula, while the Beta that you’ve already calculated is simply placed into the CAPM formula. The expected return of the market (or benchmark) is placed into the parentheses with the market risk premium, which is also from the Beta formula. This is the expected benchmark’s return minus the risk-free rate.
To continue our example, here is how the CAPM actually works:
ER = 2% + 0.83(8% – 2%)
In this case, our security has an expected return of 6.98% against an expected benchmark return of 8%. That may be okay depending upon the investor’s goals as the security in question should experience less volatility than the market thanks to its Beta of less than 1.
While the CAPM certainly isn’t perfect, it is relatively easy to calculate and gives investors a means of comparison between two investment alternatives.
Now, we’ll take a look at five stocks that not only offer investors low Beta scores, but attractive prospective returns as well.
Analysis On The Top 5 Low Beta Stocks
The following 5 low beta stocks have the lowest (but positive) Beta values, in ascending order from lowest to highest. They also pay dividends to shareholders.
We focused on Betas above 0, as we are still looking for stocks that are positively correlated with the broader market:
5. Hormel Foods (HRL)
Hormel Foods was founded back in 1891 in Minnesota. Since that time, the company has grown into a juggernaut in the food products industry with nearly $10 billion in annual revenue.
Hormel has kept with its core competency as a processor of meat products for well over a hundred years, but has also grown into other business lines through acquisitions.
Hormel has a large portfolio of category-leading brands. Just a few of its top brands include include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.
The company has increased its dividend for 59 consecutive years.
Source: Investor Presentation
Hormel posted first quarter earnings on February 27th, 2025, and results were somewhat weak. The company saw adjusted earnings-per-share of 35 cents, which was three cents light of estimates.
Revenue was down fractionally year-over-year to $2.99 billion, but did beat estimates by $40 million. Organic net sales rose 1%.
The company noted supply chain disruptions within the Planters division, as well as low demand for turkey. Hormel saw higher demand for SPAM and its Black Label bacon brand.
HRL has a Beta score of 0.26.
Click here to download our most recent Sure Analysis report on HRL (preview of page 1 of 3 shown below):
4. Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb was created when Bristol-Myers and Squibb merged on October 4th, 1989. This leading drug maker of cardiovascular and anti-cancer therapeutics has annual revenues of about $46 billion.
On April 24th, 2025, Bristol-Myers reported first quarter results for the period ending March 31st, 2025. For the quarter, revenue declined 6% to $11.2 billion, but this was $490 million above estimates.
Adjusted earnings-per-share of $1.80 compared to -$4.40 in the prior year and was $0.30 better than expected. The company suffered a steep earnings-per-share loss in Q1 2024.
Adjusting for unfavorable currency exchange, revenue fell 4% for the quarter. U.S. revenues declined 7% to $7.9 billion. International was down 2% to $3.3 billion, but revenue grew 2% when excluding currency exchange.
Revlimid, which treats myeloma, decreased 44% to $936 billion due to generic competition.
Bristol-Myers provided revised guidance for 2025 as well. Adjusted earnings-per-share are projected to be in a range of $6.70 to $6.90 for the year, up from $6.55 to $6.85 previously.
BMY has a Beta score of 0.24.
Click here to download our most recent Sure Analysis report on BMY (preview of page 1 of 3 shown below):
3. Kraft-Heinz (KHC)
Kraft-Heinz is a processed food and beverages company which owns a product portfolio that includes food products such as condiments, sauces, cheese & dairy, frozen & chilled meals, and infant diet & nutrition.
The company was created in 2015 in a merger between Kraft Food Group and H. J. Heinz Company, orchestrated by Warren Buffett’s Berkshire Hathaway and 3G Capital. Kraft-Heinz is headquartered in Chicago, IL.
The Kraft-Heinz Company reported its fourth quarter earnings results in February. Revenues totaled $6.58 billion during the quarter, which was down 4.1% year-over-year. This was slightly worse than what the analyst community had expected.
Kraft-Heinz’ organic sales were down by 3.1%. This was a weaker performance compared to the previous quarter, when organic sales had declined by around 2%.
Kraft-Heinz generated earnings-per-share of $0.84 during the fourth quarter, which was above the consensus estimate. Earnings-per-share were up 8% year-over-year.
Management expects organic net sales declining by around 1% in 2025, while management is forecasting earnings-per-share to come in between $2.63 and $2.74 for the current year.
KHC has a Beta score of 0.22.
Click here to download our most recent Sure Analysis report on KHC (preview of page 1 of 3 shown below):
2. J.M. Smucker Co. (SJM)
The J.M. Smucker company has grown into an international powerhouse of packaged food and beverage products including iconic brands like Smucker’s, Jif and Folgers, along with various pet food brands.
The company generated $8 billion in sales in each of the last two fiscal years.
Source: Investor Presentation
In late February, Smucker’s reported (2/27/25) results for the third quarter of fiscal 2025, which ended on January 31st, 2025. Currency-neutral, organic sales dipped -1% over the prior year’s quarter, mostly due to supply chain disruptions.
Adjusted earnings-per-share grew 5%, from $2.49 to $2.61, and exceeded the analysts’ estimates by $0.24. Thanks to better-than-expected performance, Smucker’s slightly improved its guidance for earnings-per-share in fiscal 2025.
It lowered its guidance for growth of sales from 7.5%-8.5% to 7.25% but raised its guidance for adjusted earnings-per share from $9.70-$10.10 to $9.85-$10.15.
SJM has a Beta score of 0.19.
Click here to download our most recent Sure Analysis report on SJM (preview of page 1 of 3 shown below):
1. Campbell Soup (CPB)
Campbell Soup Company is a multinational food company headquartered in Camden, N.J. The company manufactures and markets branded convenience food products, such as soups, simple meals, beverages, snacks, and packaged fresh foods.
The company’s portfolio focuses on two specific businesses: Campbell Snacks, and Campbell Meals and Beverages. Campbell generated annual sales of $9.6 billion in fiscal 2024.
On March 12, 2024, Campbell closed on its acquisition of Sovos Brands (SOVO) for $23 per share in cash, which represented a total enterprise value of $2.7 billion, and was funded by issuing new debt. Sovos is a leader in high growth premium Italian sauces, and owns the market-leading Rao’s brand.
Campbell Soup reported second quarter FY 2025 results on March 5th, 2025. Net sales for the quarter improved by 9% year-over-year to $2.7 billion. This increase was mostly a result of the Sovos Brands acquisition. Adjusted EPS was 8% lower year-over-year at $0.74 for the quarter, which beat expectations by two cents.
The company repurchased $56 million worth of shares in H1. There remains $301 million remaining under the current $500 million share repurchase program, which is in addition to the existing $205 million remaining on its anti-dilutive share repurchase program.
Leadership updated its full-year fiscal 2025 guidance. Management now estimates that in fiscal 2025, Campbell’s adjusted earnings per share will be down 1% to 4%.
CPB has a Beta score of 0.13.
Click here to download our most recent Sure Analysis report on CPB (preview of page 1 of 3 shown below):
Final Thoughts
Investors must take risk into account when selecting from prospective investments. After all, if two securities are otherwise similar in terms of expected returns but one offers a much lower Beta, the investor would do well to select the low Beta security as they may offer better risk-adjusted returns.
Using Beta can help investors determine which securities will produce more volatility than the broader market and which ones may help diversify a portfolio, such as the ones listed here.
The five stocks we’ve looked at not only offer low Beta scores, but they also offer attractive dividend yields. Sifting through the immense number of stocks available for purchase to investors using criteria like these can help investors find the best stocks to suit their needs.
At Sure Dividend, we often advocate for investing in companies with a high probability of increasing their dividends each and every year.
If that strategy appeals to you, it may be useful to browse through the following databases of dividend growth stocks:
- The Dividend Aristocrats List: dividend stocks with 25+ years of consecutive dividend increases
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 55 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.