These 2 defensive dividend stocks will help you weather the recession without a hitch
If we are really facing a tough time and are on the verge of a recession, the only good step may be to seek a decent retreat. That refuge may be defensive-dividend stocks, which, with their regular and sustainable payouts, can greatly assist investors during this challenging period.
Why seek out defensive dividend stocks?
Dividend stocks can be a good choice during a recession for several reasons:
Income: During a recession, many investors may look for ways to generate income while they wait for the markets to recover. Dividend stocks can provide a steady stream of income, which can be especially attractive during difficult economic times.
Financial stability: companies that pay dividends tend to be more financially stable and have a track record of consistent earnings. This can make them less risky than non-dividend paying stocks during recessions.
Dividend Yield: Dividend-paying stocks may offer a higher yield during a recession because stock prices may fall, but dividends may stay the same or increase.
These are some of the main reasons to focus on stocks with a long tradition of paying dividends. Here are two interesting tips 👇
Philip Morris International
Dividend Yield: 4.95%
PM has paid a dividend for 123 years in a row, with regular dividend increases over the past 12 (13 this year).
When looking for new investment ideas in times of such uncertainty, Philip Morris International is the clear number one choice. Although the tobacco industry has seen a gradual decline in popularity, it is all offset by product price increases and innovation in tobacco products.
Cigarette and tobacco companies have proven over time that they can weather a slowing economy and still deliver higher dividend payouts to investors.
With a dividend payout ratio above 85% for the current fiscal year, Philip Morris appears poised to build on its impressive streak of annual dividend growth and demonstrate the strength and resilience of its business.
I believe Philip Morris stock is a solid pick for this year, as defensive-minded companies with strong dividends and attractive valuations typically tend to outperform in a recessionary environment (of course, this is not the rule).
Philip Morris, which was spun off from Altria in 2008, is the largest cigarette and tobacco company in the world based on net sales. The most recognized and best-selling product, sold in more than 180 countries, is the Marlboro brand. Its portfolio also includes the IQOS heated tobacco device, which is the industry leader in flame retardant tobacco products.
In general, stocks of defensive companies whose products are ''essential'' to people's daily lives, such as cigarette manufacturers, tend to perform well during a challenging market.
Kimberly-Clark
Dividend yield: 3.42%
KMB has been in the Dividend Kings category since 2022, which in other words means it has been paying and raising dividends continuously for 50 years.
Kimberly-Clark is another top dividend-paying stock with an exceptional track record of returning cash to shareholders, regardless of economic conditions.
As such, KMB is, in my opinion, a good choice for investors who want to protect themselves from further bear market volatility due to its ongoing efforts to return capital to shareholders, especially through dividend payments.
If dividends aren't enough for you, you needn't despair; in addition to dividend increases, Kimberly-Clark regularly returns capital to shareholders through share buybacks.
Kimberly-Clark is well positioned to achieve continued growth in a difficult operating environment as consumers reduce spending on discretionary items and redirect more spending to basic necessities.
Kimberly-Clark Corporation is an American multinational personal care company that manufactures primarily paper-based consumer products. The company manufactures hygiene paper products and surgical and medical instruments.
The well-diversified global consumer products company operates in 175 countries and sells a range of products that consumers need regardless of the state of the economy, including diapers, paper towels, and tissues. Its best-known brands include Huggies diapers and baby wipes, Kleenex facial tissues, Cottonelle and Scott toilet paper, and Kotex feminine hygiene products.
Taking that into account, here's another company with virtually immortal products that are and will be needed in any environment.
Some analysts even say KMB is well positioned to achieve new ATHs, thanks to its outstanding shareholder return performance combined with its leadership in household and personal products.
What dividend stocks do you prefer?
Do you have $PM or $KMB in your portfolio? Personally, I only hold $PM for the long term.
Please note that this is not financial advice. Every investment must go through a thorough analysis.
