With economic and market uncertainty at an all-time high, largely due in fact to Trump’s Trade War with China and the possibility of Britain crashing out of the EU without a deal, investors and analysts are becoming increasingly fearful that a recession might be on the horizon. On Wednesday, the US Federal Reserve cut its benchmark interest rate for the second time since July in an attempt to stimulate the slowing US economy. While certain figures, like consumer spending, bode well for the economy, it’s hard to put those fears totally to bed.
In times of uncertainty, investors regularly put their faith in safe-haven assets such as gold and bonds to help see out the storm. However, dividend-yielding stocks represent a good alternative to safe-havens, particularly in times of economic downturn. While growth stocks are usually hit the hardest during a recession, dividends historically perform better. While the value of dividend-paying stocks is likely to decline, at least you can be guaranteed that they will still return regular payments.
So let’s take a look at some recession-busting dividend stocks.
Procter & Gamble
Procter & Gamble (NYSE:PG) is a leading manufacturer of personal care, cleaning, and beauty products, which may sound pretty boring in 2019’s world of autonomous cars and artificial intelligence, but that’s what makes it such a good stock for a recession—PG manufacturers the essentials. No matter how bad a recession gets, people are always going to have to buy the essentials, and as a result, PG stock has been offering steady returns for as far back as you care to go.
Going as far back as 1978 when the company first went public, PG has been increasing its dividend amount almost every quarter since. The most recent quarter paid out $0.7459 per share in mid-August. PG stock is currently valued at $121.90, which is an increase of 35% in the year to date.
Dollar General (NYSE:DG) is an American chain of budget variety stores with over 15,000 locations in continental US alone. Obviously, as consumers feel the pinch of a recession, discount stores become more popular as they represent a cheaper alternative. DG stock has had a great year so far as well, gaining as much as 50%. These gains can be put down to strong quarterly results that led the company to raise its 2019 fiscal guidance.
DG’s dividend history is also pretty good, offering a quarterly return of $0.29 per share or 1.3% annualized. While these figures may not jump out at you compared to other dividend stocks, DG stock may offer some capital growth during a downturn to keep your portfolio ticking over.
Coca-Cola (NYSE:KO)is arguably the most recognizable brand on the plant. Think about it, when was the last time you went a day without seeing the Coke logo somewhere on a bus stop or in a shop window? It’s inescapable! Coca-Cola has dealt pretty well with a consumer shift away from sugary drinks, establishing alternatives, such as Coke Zero, as market-leading products in the sugarless drinks sphere, as well as making some promising acquisitions like Costa Coffee, a potential Starbucks (NASDAQ:SBUX) rival.
KO stock has been a solid performer in 2019, gaining as much as 18% in the year to date. Coca-Cola is very reliable when it comes to dividends, having increased its return for shareholders in each of the last 55 years. KO’s current dividend yield of 2.95% is the highest on this list. While an economic downturn will naturally impact on consumer spending, it’s unlikely Coke will feel the pinch too much given its overwhelming popularity and expanding portfolio.
While we’re all hoping fears of a recession are being blown out of proportion, it’s always better to be safe rather than sorry. What do you think?
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