Up to date on August twentieth, 2025 by Bob Ciura
On this planet of investing, volatility issues. Traders are reminded of this each time there’s a downturn within the broader market and particular person shares which are extra unstable than others expertise monumental swings in value.
Volatility is a proxy for threat; extra volatility usually means a riskier portfolio. The volatility of a safety or portfolio towards a benchmark known as Beta.
In brief, Beta is measured through a formulation that calculates the worth threat of a safety or portfolio towards a benchmark, which is usually 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
Curiously, 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) under:
This text will talk about beta extra completely, 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 under permits for simple navigation.
Desk of Contents
The Proof for Low Beta Shares Outperformance
Beta is useful in understanding the general value threat stage for buyers throughout market downturns particularly. The decrease the Beta worth, the much less volatility the inventory or portfolio ought to exhibit towards the benchmark.
That is helpful for buyers for apparent causes, significantly these which are near or already in retirement, as drawdowns must be comparatively restricted towards the benchmark.
Importantly, low or excessive Beta merely measures the scale of the strikes a safety makes; it doesn’t imply essentially that the worth of the safety stays practically fixed.
Securities might be low Beta and nonetheless be caught in long-term downtrends, so that is merely yet another software 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 trade for decrease threat.
Nevertheless, historical past would recommend that merely isn’t the case.
Certainly, this paper from Harvard Enterprise College means that not solely do low Beta shares not underperform the broader market over time – together with all market situations – they really outperform.
A protracted-term examine whereby the shares with the bottom 30% of Beta scores within the US have been pitted towards shares with the best 30% of Beta scores recommended 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 kind of compelling.
How To Calculate Beta
The formulation 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 signifies that the safety in query ought to transfer in lockstep with the benchmark. A Beta of two.0 signifies that strikes within the safety must be twice as massive in magnitude because the benchmark and in the identical route, whereas a adverse Beta signifies that actions within the safety and benchmark have a tendency to maneuver in reverse instructions or are negatively correlated.
Associated: The S&P 500 Inventory With Adverse Beta.
In different phrases, negatively correlated securities could 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 route because the benchmark, however with smaller relative modifications.
Right here’s a take a look at the formulation:
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 tough to compute – particularly in Excel.
Moreover, Beta will also be calculated because the correlation coefficient of the safety in query and the market, multiplied by the safety’s normal deviation divided by the market’s normal deviation.
Lastly, there’s a vastly simplified approach to calculate Beta by manipulating the capital asset pricing mannequin formulation (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 (usually Treasuries at the least two years out)
Your asset’s price of return over some interval (usually one 12 months to 5 years)
Your benchmark’s price of return over the identical interval because the asset
To point out 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 could 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 formulation. 5 divided by six yields a worth of 0.83, and that’s the Beta for this hypothetical safety.
On common, we’d count on an asset with this Beta worth to be 83% as unstable because the benchmark.
Occupied with it one other means, this asset must be about 17% much less unstable than the benchmark whereas nonetheless having its anticipated returns correlated in the identical route.
Beta & The Capital Asset Pricing Mannequin (CAPM)
The Capital Asset Pricing Mannequin, or CAPM, is a typical investing formulation 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 selected 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 formulation 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 danger-free price is similar as within the Beta formulation, whereas the Beta that you just’ve already calculated is solely positioned into the CAPM formulation. The anticipated return of the market (or benchmark) is positioned into the parentheses with the market threat premium, which can be from the Beta formulation. 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 definitely isn’t good, it’s comparatively simple to calculate and offers buyers a method of comparability between two funding alternate options.
Now, we’ll check out 5 shares that not solely supply buyers low Beta scores, however enticing potential returns as effectively.
Evaluation On The High 5 Low Beta Shares
The next 5 low beta shares have the bottom (however constructive) Beta values, in ascending order from lowest to highest. In addition they pay dividends to shareholders.
We targeted on Betas above 0, as we’re nonetheless in search of shares which are positively correlated with the broader market:
5. Altria Group (MO)
Altria is a tobacco inventory that sells cigarettes, chewing tobacco, cigars, e-cigarettes, and extra beneath a wide range of manufacturers, together with Marlboro, Skoal, and Copenhagen, amongst others.
This can be a interval of transition for Altria. The decline within the U.S. smoking price continues. In response, Altria has invested closely in new merchandise that attraction to altering shopper preferences, because the smoke-free class continues to develop.
The corporate additionally has a 35% funding stake in e-cigarette maker JUUL, and a forty five% stake within the Canadian hashish producer Cronos Group (CRON).
On July 30, 2025, Altria Group, Inc. reported its monetary outcomes for the second quarter of 2025. The corporate posted adjusted earnings per share of $1.44, surpassing the analyst estimate of $1.38 and rising 8.3% 12 months over 12 months.
Income got here in at $6.1 billion, above the consensus estimate of $5.2 billion however down 1.7% in comparison with the identical interval final 12 months. Web revenues have been $6,102 million, with gross revenue at $3,900 million and working earnings at $3,200 million.
Web earnings stood at $2.4 billion, down from $3.8 billion in Q2 2024, impacted by a major goodwill impairment within the e-vapor phase.
Home cigarette volumes declined 10.2%, however the smokeable merchandise phase delivered stable adjusted working corporations earnings development behind Marlboro’s energy.
Click on right here to obtain our most up-to-date Positive Evaluation report on Altria (preview of web page 1 of three proven under):
4. Humana Inc. (HUM)
Humana is among the largest non-public well being insurers within the U.S. with a give attention to administering Medicare Benefit plans. The agency has constructed a distinct segment specializing in government-sponsored applications, with practically all its medical membership stemming from particular person and group Medicare Benefit, Medicaid, and the army’s Tricare program.
On the finish of 2024, the corporate had roughly 16.6 million members in medical profit plans, in addition to roughly 4.8 million members in specialty merchandise. In 2024, 82% of premiums and companies income got here from contracts with the federal authorities.
On July thirtieth, 2025, Humana launched its second-quarter 2025 outcomes for the interval ending June thirtieth, 2025. For the quarter, the corporate reported revenues of $32.39 billion and adjusted earnings-per-share of $6.27, in comparison with income of $29.54 billion and adjusted earnings-per-share of $6.96 in the identical quarter of 2024.
The Insurance coverage phase reported revenues of $31.09 billion, up from $28.53 billion within the year-ago quarter, pushed by increased Medicare premiums and membership development in state-based contracts and PDPs. The profit ratio for the Insurance coverage phase elevated to 89.9% from 89.5%, reflecting a mixture shift towards increased profit ratio companies and incremental investments in outcomes, whereas the working value ratio remained flat at 8.3%.
The CenterWell phase revenues elevated to $5.54 billion from $4.95 billion within the year-ago quarter, attributed to development in pharmacy and first care. The phase’s working value ratio rose to 92.7% from 92.0%, pushed by the phase-in of the v28 threat mannequin revision, partially offset by operational enhancements in main care.
The corporate up to date its 2025 earnings steering. Adjusted EPS is estimated to be roughly $17.00 from $16.25, suggesting a rise of 4.9% from the FY 2024 determine of $16.21. The corporate assumes that its pricing and price methods will assist earnings regardless of a decline in Medicare Benefit membership.
Click on right here to obtain our most up-to-date Positive Evaluation report on HUM (preview of web page 1 of three proven under):
3. Hershey Co. (HSY)
The Hershey Firm, based in 1894, is a chocolate and sugar confectionary merchandise producer that sells main manufacturers similar to Hershey’s, Reese’s, Kisses, Cadbury, Ice Breakers, Package Kat, Almond Pleasure, Jolly Rancher, Twizzlers, Heath, and Milk Duds. Hershey primarily operates in North America however has worldwide operations as effectively. The corporate is headquartered in Hershey, PA.
On Could 1st, 2025, Hershey reported monetary outcomes for the primary quarter of fiscal 2025. The North America Confectionary phase (82% of gross sales) noticed its gross sales lower -15% over the prior 12 months’s quarter as a result of abnormally excessive inventories within the second quarter of 2024. Earnings-per-share fell -32%, from $3.07 to $2.09, however beat the analysts’ consensus by $0.16, primarily due to an efficient hedging technique, which partly offset the impact of exceptionally excessive cocoa costs.
Hershey is going through a particularly robust headwind from sky-high cocoa costs, which squeeze the revenue margins of the chocolate maker.
Hershey’s earnings-per-share development stems from a number of components. The primary one is natural income development, which Hershey has achieved regardless of the general public changing into extra aware about wholesome consuming habits. The corporate has additionally been in a position to enhance its margins all through the final decade.
Hershey owns well-recognized manufacturers, so value hikes haven’t been a headwind to rising the amount of its merchandise. Hershey had additionally been reasonably repurchasing its shares, which has added some extra development to the corporate’s earnings-per-share.
Click on right here to obtain our most up-to-date Positive Evaluation report on HSY (preview of web page 1 of three proven under):
2. Cboe World Markets (CBOE)
Cboe World Markets, Inc. is a big trade holding firm. It presents a various vary of merchandise in a number of asset courses, and operates in 5 main enterprise segments: Choices, U.S. equities, futures, European equities, and international FX.
Transaction & clearing charges (from contracts or shares traded on exchanges) composed 75% of 2024 revenues, and regulatory charges, market knowledge, and connectivity charges are different income sources.
On August 1st, 2025, Cboe World Markets launched its second quarter outcomes for the interval ending June thirtieth, 2025. For the quarter, the corporate reported internet income of $587.3 million, which represents a 14% improve in contrast with internet income of $513.8 million in the identical quarter final 12 months. Earnings-per-share (EPS) for the quarter have been $2.23, up from $1.33 per share within the earlier 12 months’s quarter. Adjusted EPS was $2.46, up 14% year-over-year.
Second quarter development was pushed by broad-based energy throughout a number of enterprise segments, together with Derivatives (+17%), Money and Spot Markets (+11%), and Knowledge Vantage (+11%), previously Knowledge and Entry Options. Derivatives Markets development mirrored robust choices buying and selling volumes (whole choices ADV up 20%). Adjusted working earnings rose to $374.0 million, an 18% improve year-over-year, and the adjusted working margin was 63.7%, reflecting a rise from 61.4% within the prior 12 months.
Adjusted working bills have been $213.3 million, up from $197.1 million year-over-year, pushed by increased compensation and advantages, depreciation and amortization, and expertise assist companies, partially offset by decrease journey and promotional bills {and professional} charges.
Click on right here to obtain our most up-to-date Positive Evaluation report on CBOE (preview of web page 1 of three proven under):
1. Greenback Basic Corp. (DG)
Greenback Basic Company opened its first greenback retailer in 1955. In the present day, it’s the main U.S. “greenback retailer”. About 80% of its objects are supplied at $5 or much less. Greenback Basic sells all kinds of merchandise in 4 classes: consumables, seasonal, residence merchandise, and attire. About 77% of gross sales are from consumables.
Greenback Basic operated 20,582 shops as of Could 2, 2025. Most shops are situated in cities with 20,000 or fewer folks and are about 7,400 sq. ft. Whole gross sales have been $40.6B in FY 2024.
Greenback Basic reported Q1 FY2025 outcomes on June third, 2025. After wonderful efficiency throughout and after the COVID-19 pandemic, the corporate is experiencing weak point. Nevertheless, Greenback Basic continues to be rising albeit extra slowly due to new retailer openings offset by retailer closures. The return of the prior CEO and the Again-to-Fundamentals effort have resulted in renewed focus, constructive same-store gross sales, and higher working outcomes.
Web gross sales elevated 5.3% to $10,436M from $9,914M on a year-over-year foundation as same-store gross sales grew 2.4% on increased common transactions and retailer openings, offset by retailer closures and decrease visitors. Diluted earnings per share elevated 7.9% to $1.78 from $1.65 within the prior 12 months on higher income and margins. All 4 classes elevated: consumables (+5.2%), seasonal (+6.2%), residence merchandise (+5.9%), and attire (+3.2%).
Greenback Basic raised steering to about 3.7% to 4.7% gross sales development and same-store gross sales development of 1.5% to 2.5%, and diluted EPS of $5.20 to $5.80 in fiscal 2025.
Click on right here to obtain our most up-to-date Positive Evaluation report on DG (preview of web page 1 of three proven under):
Last Ideas
Traders should take threat under consideration when choosing from potential investments. In any case, if two securities are in any other case comparable when it comes to anticipated returns however one presents a a lot decrease Beta, the investor would do effectively to pick out the low Beta safety as they could supply higher risk-adjusted returns.
Utilizing Beta can assist buyers decide which securities will produce extra volatility than the broader market and which of them might assist diversify a portfolio, similar to those listed right here.
The 5 shares we’ve checked out not solely supply low Beta scores, however additionally they supply enticing dividend yields. Sifting by the immense variety of shares obtainable for buy to buyers utilizing standards like these can assist buyers discover the very best shares to swimsuit their wants.
At Positive Dividend, we regularly advocate for investing in corporations with a excessive chance of accelerating their dividends each 12 months.
If that technique appeals to you, it could be helpful to flick thru the next databases of dividend development shares:
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