These are 2 stocks from the most resilient sector you'll find on the planet

It probably occurs to everyone that in bad times, investors withdraw to resilient sectors. And one of them is quite possibly even more resilient than the others.

You won't find many more resilient sectors than food

Investors tend to move into safe areas before and during recessions. That's because when a recession hits, the more cyclical and riskier companies with higher profits offer worse prospects for one's capital than companies that aren 't as affected by an economic downturn.

In practice, this means that sectors such as technology and consumer goods tend to perform very poorly, while sectors such as utilities and basic consumer goods outperform due to their reliable profit streams. And can you think of anything that people need regardless of the situation? That's right - food and water!

With this in mind, let's take a look at two companies in this very sector.

Campbell Soup $CPB-0.4%

A company that manufactures and distributes a huge variety of food and beverage products in the United States. Through these segments, the company offers its namesake brand of soups, broths, pastas, sauces, beans, gravies, tomato juice, and more. In addition, it has an extensive snack food business with popular brands such as Pepperidge Farm, Milano, Goldfish, Late July, Emerald, and others. Campbell has thousands of distribution locations in the U.S. and thousands more internationally.

It has annual sales of approximately $9 billion and a market capitalization of just under $16 billion. Campbell has long been a high-yielding stock that has continuously paid dividends to shareholders for more than a decade. However, its streak of dividend increases ended in fiscal 2022 as the company decided not to increase the payout. Today, it remains at $1.48 per share per year.

The company's dividend history doesn't look bad. Source

That said, the payout ratio is a solid 51% of earnings, which is sustainable especially since the company's earnings stream is not affected by the recession. Campbell sells mostly basic consumer goods - staple foods that are considered basic goods rather than luxuries - so demand is stable even in different economic conditions.

Further, we see 3% annual growth on the horizon for Campbell, which means it should be able to maintain and increase its dividend at its discretion in the years ahead. I point out that the combination of a low payout ratio and decent earnings growth usually means there's not much risk of a dividend cut, whether or not a severe recession comes.

General Mills $GIS+0.3%

A company that manufactures and distributes branded packaged foods globally. The company sells a diverse assortment of goods, including cereals, yogurt, soups, meal kits, snacks, ice cream, nutrition bars, frozen pizza, pet food, etc., etc. General Mills tends to focus on the premium markets (which may seem a bit at odds with the idea of recession-proofing) that it serves, which it has done well given its reputation and long history of operations. This ensures stable demand and generally strong pricing power.

https://www.youtube.com/watch?v=eeluKqXaaYU

The company is certainly no slouch. It has annual revenues of approximately USD 19.5 billion and a market capitalisation of USD 49 billion.

Investors know that the company has the potential to protect their money in a crisis - which is why its value has been rising since the first signs of trouble.

Like Campbell, General Mills is not reliable when it comes to raising dividends. The company is currently on a streak of three years of increases, but quite often chooses not to raise the dividend. Yet General Mills has been paying dividends to shareholders gradually for decades, so while the increases are not necessarily reliable, the payout itself is. The stock yields 2.6% today, a full one percentage point better than the S&P 500.

What about you? Do you have either of this pair in your portfolio?

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Disclaimer: This is in no way an investment recommendation. It is purely my summary and analysis based on data from the internet and other sources. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.

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Asi každého napadne, že ve špatných časech se investoři stahují do odolných sektorů. A jeden z nich je dost možná ještě odolnější než ostatní.

A company that manufactures and distributes branded packaged foods globally. The company sells a diverse assortment of goods, including cereals, yogurt, soups, meal kits, snacks, ice cream, nutrition bars, frozen pizza, pet food, etc., etc. General Mills tends to focus on the premium markets ................

nice information

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