3 Recession-Ready Stocks That Thrive When the Economy Sputters

Key Points

• With recession signals flashing, investors might turn to defensive plays that offer some resilience if the market should fall.
• Church & Dwight and Spire provide essential household golds and natural gas utility services, respectively, and have strong fundamentals and a history of dividends.
• Chemed operates in a unique dual-sector role with businesses in both home services and healthcare. Despite recent challenges, it may be a compelling defensive play as well.

Fresh off the first federal funds rate cut of the year, investors are keeping a close watch over recession indicators. A struggling housing market, warning signs about the labor market, and other metrics may suggest an impending recession, despite the fact that many stocks continue to soar higher. Cautious investors might consider pivoting toward a more defensive position with their equity investments if they believe there is reason to suspect a recession in the coming quarters.

Fortunately, there are a number of plays to make to help prepare. We'll take a close look at one firm each from the recession-resistant consumer staples and utilities sector, plus a third from the healthcare space that may be primed for stability even if the broader market should falter.

Essential Consumer Goods Stock With Reliable Dividends

Church & Dwight Co. Inc. NYSE: CHD is known for its wide array of household and personal care brands, including Arm & Hammer, Oxyclean, Trojan, and many others. These products occupy a unique space in that many consumers are likely to view them as essential regardless of the broader economy, a feature that may help to insulate Church & Dwight from a potential recession. That the company continues to expand its product lineup, both through its own R&D and via strategic acquisitions like the purchase of hand sanitizer maker Touchland earlier this year, bodes well for its continued sales performance, even if significant growth is unlikely at this stage.

Investors should not see CHD shares as a growth opportunity overall, but rather as a potential source of stability during otherwise volatile periods. Boosting this appeal is the company's long dividend history, including nearly three decades of steady increases, a compelling yield of 1.30%, and a conservative payout ratio of 55.66%.

CHD shares have fallen by more than 10% year-to-date, a rare bit of turbulence as the firm has wrestled with the impact of tariffs on its business. Analysts do anticipate a recovery, though, and have predicted upside potential of more than 14%.

Fast-Growing Utility Stock With Big Expansion Plans and Rock-Solid Dividends

A regional natural gas utility firm, Spire Inc. NYSE: SR, serves customers in Mississippi, Alabama, and Missouri. However, the company is expanding through the acquisition of Piedmont Natural Gas of Tennessee, bringing in a new customer base estimated to be greater than 200,000. Beyond the immediate accretive effects of this acquisition, it is a strong strategic move as well—Nashville, which is covered by Piedmont, is experiencing both rapid population and data center growth, which will likely contribute to bottom-line increases of around 8% in the year to come, according to analysts.

For utilities firms like Spire, a risk to stability lies in the need to conduct expensive operations and maintenance work on a consistent basis. Fortunately, Spire has kept these costs low—growing by less than 1% year-to-date (YTD) as of the latest earnings report—which should provide some protection against inflation. Like Church & Dwight, Spire also represents a strong dividend play, with a yield of 4.12% and a healthy payout ratio of 67.12% over 22 years of consecutive distribution increases.

Undervalued Dual-Sector Stock With Recession-Resistant Services and Long-Term Upside

Chemed Corp. NYSE: CHE operates at the intersection of home services and healthcare thanks to its two primary brands, Roto-Rooter and Vitas Healthcare. Both segments provide services likely to remain robust in a recession—Roto-Rooter offers plumbing, water restoration, and drain cleaning tools and services, while Vitas focuses on end-of-life healthcare. While shifts in Medicare at the legislative level could disrupt that portion of Chemed's business, the longer-term strength of its operations is stable.

Going forward, Chemed will need to navigate hospice care caps, labor concerns, and higher insurance costs in order to continue to grow its bottom-line, which fell far short of analyst predictions in the latest quarter. These obstacles have exerted downward pressure on CHE shares, which are now trading at their lowest P/E level in more than four years. This presents a potential buy opportunity for a company with longer-term strength and the ability to outperform during broader economic troubles.