2022 is going to be a tough year for investors. Year-to-date, the S&P 500 has plunged more than 20 percent.
But the stock market slump isn’t the only thing to worry about, as Wells Fargo now sees the U.S. economy falling into a mild recession by mid-2023.
“In our view, the magnitude and duration of the recession will be more or less equivalent to the 1990-1991 recession. The recession lasted two quarters, and real GDP fell 1.4 percent from peak to trough,” Jay Bryson, the bank’s chief economist, wrote in a report last month.
Good news? Wells Fargo recently announced a group of recession-resistant stocks – here are three that can help you defend.
Colgate Palmolive (CL)
It’s easy to see why Colgate Palmolive belongs in a recession-proof portfolio.
The company has a presence in operating markets such as oral care, personal care, pet nutrition and home care.
Notably, its leading brand, Colgate, has by far the largest share of the global toothpaste market. Thanks to brands like Softsoap and Palmolive, the company is also the dominant player in the liquid soap market.
In tough times, no one will stop buying soap or toothpaste. This simple fact has led to a long and consistent record of returning cash to investors.
The company has increased its dividend for 60 consecutive years.
Business is still growing: In the first quarter, Colgate Palmolive’s organic sales grew 4 percent year-over-year.
CL stock pays a quarterly dividend of 47 cents per share, for an annual yield of 2.3 percent.
WM (WM)
Formerly known as Waste Management, WM bills itself as the largest provider of integrated waste management environmental solutions in North America. It says it provides collection, recycling and disposal services to more than 20 million residential, commercial, industrial and municipal customers.
Waste management is not an exciting business, but it is an essential one: boom or bust, people still need someone to collect their waste.
The company was founded in 1968 and is still in the process of cleaning up.
In the first quarter, Wealth Management revenue grew 13 percent year-over-year to $4.66 billion. Adjusted earnings per share for the quarter were $1.29, up 22 percent year-over-year.
WM currently pays a quarterly dividend of 65 cents per share, which is 13% higher than the dividend paid a year ago. This makes 2022 the 19th consecutive year the company has raised its dividend.
The stock has an annual yield of 1.7%.
Johnson & Johnson (JNJ)
With a strong position in the consumer health, pharmaceutical and medical device markets, healthcare giant Johnson & Johnson has delivered regular returns to investors throughout the economic cycle.
Many of the company’s consumer health brands – such as Tylenol, Band-Aid and Listerine – are ubiquitous and used as shorthand for entire product categories. jNJ has a total of 29 products, each with JNJ has a total of 29 products, each with annual sales of more than $1 billion.
Johnson & Johnson not only posts recurring annual profits, but continues to grow: Over the past 20 years, Johnson & Johnson’s adjusted earnings have grown at an average annual rate of 8%.
The stock has been on an upward trend for decades. It’s showing its resilience again in 2022: While the broader market has entered a bear market, JNJ is actually up 3% so far this year.
Johnson & Johnson also declared its 60th consecutive annual dividend increase in April and now yields 2.5%.