With some concerning economic news this week including rising unemployment claims and sinking retail sales, it might be prudent to start considering stocks that should hold up well in a weak economy. The beauty of buying companies that are resilient during a recession is that they have a chance to deliver decent returns in any economic environment and provide some stability to your portfolio. These are businesses with strong bottom lines and steady cash flows that have what it takes to deal with long periods of uncertainty.
While we don’t exactly know whether or not the economy is suffering a short-term downturn or if we are facing a prolonged recession, buying recession-proof dividend stocks can be an intelligent move for any investor. Keep reading on to learn about 3 recession-proof dividend stocks to buy now.
Kimberly-Clark Corp (NYSE:KMB)
When you are looking at companies that have a steady demand for their products and services, the consumer staples sector is a great place to start. Kimberly-Clark is a good example of a dividend-payer with static demand for its products, as it’s a massive company that sells household products in over 175 different countries. Some of the classic brands that Kimberly-Clark owns include Kleenex, Scott, and Huggies. People will always need things like tissues, paper towels, and diapers, which means investors can count on this company to deliver reliable earnings and stable sales.
Kimberly-Clark is a strong pick at this time thanks to its potential for solid sales growth in international markets, an area in which it has been steadily expanding. The company is also a dividend aristocrat that has increased its dividend for 48 consecutive years. The stock’s current 3.26% dividend yield is one of the highest among large-cap consumer staples companies. Kimberly-Clark’s forward P/E ratio of 16.85 means that the stock is a great value when compared to its peers. If we start to see a rotation into value stocks in the coming months, this is an investment opportunity that could pay off in a big way.
General Mills (NYSE:GIS)
Next up is one of the largest packaged foods manufacturers in the world, General Mills. This is another recession-proof company that has several well-known brands that generate consistent cash flows for long-term investors. Adding an industry leader that continues to grow its market share can pay off handsomely over the years. With strong brand names like Cheerios, Progresso, Pillsbury, Yoplait, and more in its product portfolio, this is a company that should prove to be very resilient during a recession.
Investors should be attracted to the 3.63% dividend yield and the fact that General Mills should benefit from the large consumer behavior shift to online grocery shopping. Investors also might be surprised to learn that General Mills has a Pet Food segment that could help to drive sales going forward. With more people adopting pets during the pandemic and the opportunity to sell pet products with e-commerce sales channels, this is an intriguing component to the company that could support long-term growth.
Eli Lilly and Company (NYSE:LLY)
Health care stocks tend to hold up well in recessions because their products and services are always in demand, especially as the world continues to manage the global pandemic. That’s a big reason why Eli Lilly and Company is a great option. It’s a company that discovers, develops, and manufactures human pharmaceutical products and animal health products. With top-selling drugs including Trullcity for diabetes, Humalog for diabetes, Alimta for lung cancer, and Forteo for osteoporosis along with a strong pipeline, investors can expect a nice balance between steady sales and long-term growth potential with an investment in Eli Lilly.
The company has a strong balance sheet and also recently acquired Disarm Therapeutics, which could help the company improve its offerings for neurological diseases. Eli Lilly shares have also received a recent boost thanks to promising results from the Phase 2 study of the company’s Alzheimer’s treatment, called Donanemab. The drug could help to slow cognitive decline for people with early symptomatic Alzheimer’s disease, which would be a massive advance in the healthcare world. With a dividend yield of 1.78% and the fact that Eli Lilly’s COVID-19 antibody treatment received FDA Emergency Use Authorization back in November, this is a recession-proof stock with a ton of upside.
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MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and General Mills wasn't on the list.
While General Mills currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
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