12 Recession-Proof Shares For Dividends In Bear Markets & Past

Revealed on December twenty fifth, 2022 by Nikolaos Sismanis

The inventory market had a tough time in 2022, with the extremely tremulous macroeconomic atmosphere spooking buyers and inducing a stormy bear market. At Positive Dividend, we’re extremely centered on shares with robust dividend development prospects.

On account of uncertainty remaining fairly elevated and the opportunity of a looming recession in 2023 being slightly noteworthy, we have now recognized a number of recession-proof shares whose dividend prospects ought to stay rock-solid if the present bear market persists.

As a reminder, recession-proof shares are shares which might be thought-about to be much less susceptible to financial downturns and recessionary market environments and, subsequently, could also be much less affected by elevated volatility within the capital markets. After all, there isn’t a such factor as a completely recession-proof inventory, as all kinds of securities are topic to some extent of market danger.

Nonetheless, some shares could also be much less delicate to harsh financial circumstances and, subsequently, could also be much less prone to expertise as a lot of an affect of their monetary efficiency throughout a recession. Consequently, dividend-paying, recession-poof shares ought to take pleasure in higher longevity qualities in the case of their payouts.

Some examples of the kinds of firms that match this description are discovered among the many Dividend Aristocrats.

The Dividend Aristocrats are a choose group of 65 shares within the S&P 500 Index, with 25+ consecutive years of dividend will increase.

You may obtain an Excel spreadsheet of all 65 Dividend Aristocrats (with metrics that matter corresponding to dividend yields and price-to-earnings ratios) by clicking the hyperlink beneath:

 

On this article, we’re inspecting 12 dividend shares coated in our Sure Analysis Research Database, whose recession-proof traits ought to allow them to continue to grow their dividends in a bear market and past.

In actual fact, all 12 shares featured right here have been assigned an A score of their Dividend Risk Score. Additionally they characteristic a monitor file of not less than 15 years of consecutive annual dividend will increase, which means they’ve already confirmed their skill to resist harsh financial environments, together with the Nice Monetary Crises and, most not too long ago, the COVID-19 pandemic.

Recession-Proof Inventory #12: Normal Dynamics Company (GD)

• Dividend Yield: 2.0%
• Years of Dividend Development: 31

Normal Dynamics is a US aerospace & protection firm that now operates in 4 enterprise segments: Aerospace (21% of gross sales), Fight Techniques (19%), Marine Techniques (26%), and Applied sciences (34%).

Normal Dynamics Aerospace section is targeted on enterprise jets and providers, whereas the rest of the corporate is on protection. The corporate makes the well-known merchandise such because the M1 Abrams tank, Stryker automobile, Virginia-class submarine, Columbia-class submarine, and Gulfstream enterprise jets. Based mostly on income, Normal Dynamics is the fourth largest protection firm.

The corporate recorded revenues of roughly $38.5 billion in 2021, and each the highest and backside traces have grown persistently through the years as a result of growing US protection spending, worldwide gross sales, and enterprise jet gross sales. Accordingly, the corporate has managed to persistently enhance its dividend, now boasting a powerful monitor file of 31 consecutive annual dividend will increase. This makes Normal Dynamics a Dividend Aristocrat.

Supply: Investor Presentation

We consider the corporate will proceed performing effectively as its established naval and floor platforms place it effectively to maintain profitable future help upkeep and modernization contracts in addition to future prime contracts. Most not too long ago, the corporate was awarded a $5.13 billion modification to a beforehand awarded contract by the U.S. Navy. The continued, unlucky warfare in Ukraine also needs to be a powerful driver towards future order influx.

On account of its robust company-wide backlog of $88.1 billion, its low payout ratio of 41%, and the truth that the protection trade experiences a number of tailwinds lately, we consider that Normal Dynamics’ dividend development prospects ought to stay rock-solid throughout a possible recession.

Click here to download our most recent Sure Analysis report on General Dynamics (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #11: MSA Security Integrated (MSA)

• Dividend Yield: 1.3%
• Years of Dividend Development: 52

MSA Security Integrated, previously Mine Security Home equipment, was established in 1914. Immediately, it develops and manufactures security merchandise. Prospects come from a wide range of industrial markets, together with oil & gasoline, hearth service, development, mining, and the navy.

MSA Security’s main merchandise embody gasoline and flame detection, air respirators, head safety, fall safety, air-purifying respirators, and eye safety gear. The $5.5 billion market cap firm has elevated its dividend for 52 years, which qualifies it as a Dividend King.

Supply: Investor Presentation

On October twenty sixth, 2022, MSA launched its Q3 2022 outcomes for the interval ending September thirtieth, 2022. For the quarter, income got here in at $381.7 million, a 12.2% enhance in comparison with Q3 2021. Income development was pushed completely organically. Nevertheless, the 16% natural development the corporate achieved was offset by a 4% FX headwind.

Orders grew within the double digits within the second quarter, as effectively, leading to a book-to-bill ratio effectively above 1.0 and a file backlog. Thus, the corporate ought to preserve producing strong revenues, not less than over the subsequent a number of quarters.

The corporate has a world attain that opponents can not match, with roughly a 3rd of annual gross sales from outdoors the Americas, and it will probably put money into development initiatives to retain its trade management. With its payout ratio standing at simply 33%, a strong order backlog, and administration’s specific dedication to rising the dividend yearly, we consider MSA buyers ought to sleep effectively at night time with regard to its dividends.

Click here to download our most recent Sure Analysis report on MSA Safety Incorporated (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #10: Medtronic plc (MDT)

• Dividend Yield: 3.6%
• Years of Dividend Development: 45

Medtronic is the biggest producer of biomedical gadgets and implantable applied sciences on the earth. It serves physicians, hospitals, and sufferers in additional than 150 nations and has over 90,000 workers. Medtronic has 4 working segments: Cardiovascular, Medical Surgical, Neuroscience, and Diabetes. Medtronic has raised its dividend for 45 consecutive years. The $103 billion market cap firm generated $32 billion in income in its final fiscal yr.

In late November, Medtronic reported (11/22/22) outcomes for the second quarter of the fiscal yr 2023. Natural income grew 2% over final yr’s quarter, however income dipped by 3%, and earnings-per-share fell -by 2% as a result of a powerful greenback. Outcomes had been damage by gradual provide restoration and modest market process volumes in some companies, and therefore Medtronic lowered its steering for annual earnings-per-share from $5.53 to $5.65, right down to $5.25 to $5.30.

Supply: Investor Presentation

Medtronic’s most compelling aggressive benefit is its mental management in a sophisticated trade inside the healthcare sector. Medtronic additionally has a powerful product pipeline that ought to drive its development for the foreseeable future, probably to end in additional dividend hikes. The payout ratio stands at a wholesome 51%.

Click here to download our most recent Sure Analysis report on Medtronic (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #9: S&P International Inc. (SPGI)

• Dividend Yield: 1.0%
• Years of Dividend Development: 49

S&P International is a worldwide supplier of economic providers and enterprise info with a market capitalization of $108.2 billion and has annual income of about $12 billion. By means of its numerous segments, it supplies credit score scores, benchmarks and indices, analytics, and different knowledge to commodity market members, capital markets, and automotive markets.

The corporate’s early 2022 acquisition of IHS Markit boosted its professional forma income by about 50%. S&P International has paid dividends constantly since 1937 and has elevated its payout for 49 consecutive years.

Supply: Investor Presentation

S&P reported third-quarter earnings on October twenty seventh, 2022, and outcomes had been combined. Adjusted earnings-per-share got here to $2.93, which was 13 cents higher than anticipated. Income rose 37% year-over-year to $2.86 billion, butwas $60 million mild in opposition to estimates. Adjusted working revenue declined 200bps to 46.0% of income from the year-ago interval.

However, S&P International is susceptible to recessions, as firms, nations, and people turn out to be way more conservative throughout such intervals, and thus their curiosity in monetary providers and debt issuance tremendously decreases. This was evident within the Nice Recession when S&P International’s earnings-per-share fell -21%.

Nevertheless, provided that it was a monetary disaster and most firms noticed their earnings collapse, the efficiency of S&P International was strong total. To its credit score, S&P International’s earnings thrived in 2020 regardless of the capital markets briefly crumpling.

Click here to download our most recent Sure Analysis report on S&P Global (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #8: Atmos Power Company (ATO)

• Dividend Yield: 2.6%
• Years of Dividend Development: 39

Atmos Power can hint its beginnings all the best way again to 1906, when it was fashioned in Texas. Since that point, it has grown, each organically and thru mergers, to a $16.2 billion market capitalization.

The corporate distributes and shops pure gasoline in eight states, serves over 3 million clients, and may generate about $4.3 billion in income this yr. Atmos has a 39-year historical past of elevating dividends, putting amongst the elite group of Dividend Aristocrats.

Atmos reported fourth-quarter and full-year earnings on November ninth, 2022, and outcomes had been higher than anticipated on each the highest and backside traces. Earnings-per-share got here to 51 cents, seven cents higher than estimates. Income soared 27% year-over-year to $723 million, which was $63 million higher than anticipated.

Supply: Investor Presentation

The corporate’s aggressive benefit is in its extensive distribution space and lack of direct competitors in its service areas for residential and business clients. As well as, discretionary use of pure gasoline is low as individuals sometimes use what they want, no matter financial circumstances, which means Atmos’ recession efficiency is prone to be resilient, as seen in 2020.

Click here to download our most recent Sure Analysis report on Atmos Energy Corporation (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #8: Colgate-Palmolive Firm (CL)

• Dividend Yield: 2.6%
• Years of Dividend Development: 39

Colgate-Palmolive has been in existence for greater than 200 years, having been based in 1806. It operates in lots of client staples markets, together with Oral Care, Private Care, Dwelling Care, and, extra not too long ago, Pet Vitamin. These segments generate practically $18 billion in annual income for the corporate. The inventory’s market capitalization sits at $66 billion.

Colgate reported third-quarter earnings on October twenty eighth, 2022, and outcomes had been combined. The corporate reported adjusted earnings-per-share of 74 cents, which was a penny higher than estimates. Income was up 1.1% to $4.46 billion, however missed estimates by $10 million. Natural gross sales had been up 7%, with development in each division and in all 4 product classes. The gross revenue margin was down 220 foundation factors year-over-year to 57.2% as inflationary pressures took their toll as soon as once more.

Supply: Investor Presentation

The corporate’s payout ratio is 63% of earnings, considerably larger than lately. Nonetheless, see the dividend as secure, and we consider Colgate-Palmolive will produce many extra years of dividend will increase. Colgate is a recession-resistant inventory, given the staple nature of the merchandise it sells, and its aggressive benefit is discovered within the dominant manufacturers it owns. That is confirmed within the firm’s 60-year-long dividend development monitor file.

Click here to download our most recent Sure Analysis report on Colgate- Palmolive Corporation (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #7: California Water Service Group (CWT)

• Dividend Yield: 1.7%
• Years of Dividend Development: 54

California Water Service is the third largest publicly-owned water utility in the US. The corporate has six subsidiaries that present water to about two million individuals, primarily in California, with some extra operations in Washington, New Mexico, and Hawaii.

California Water Service was based in 1926 and has elevated its dividend yearly for greater than half a century, which makes the corporate a Dividend King.

California Water Service reported its third-quarter earnings outcomes on October 27. The corporate reported that its revenues totaled $266 million throughout the quarter, which was 4% greater than the revenues that California Water Service generated throughout the earlier yr’s quarter. The income enhance was largely pushed by larger buyer consumption.

California Water Service generated a web profit-per-share of $1.03 throughout the third quarter, which was beneath expectations, because the analyst consensus estimate was missed by $0.07. Earnings nonetheless rose sequentially, as California Water Providers is all the time most worthwhile throughout the summer time quarter when water demand is method larger than throughout the winter quarters.

Supply: Investor Presentation

The predictable nature of the corporate’s earnings, mixed with a payout ratio that’s not overly excessive, signifies that the dividend appears to be like very secure. Additional, California Water Service is a regulated utility, and as such, it doesn’t have to fret about competitors an excessive amount of.

Click here to download our most recent Sure Analysis report on California Water Service (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #6: Silgan Holdings Inc. (SLGN)

• Dividend Yield: 1.2%
• Years of Dividend Development: 18

Silgan Holdings manufactures and sells steel and plastic containers, in addition to packaging closures. Its containers are present in on a regular basis meals consumables corresponding to pet meals, vegetables and fruit, and drinks, whereas its closures are utilized to beverage, backyard, and private care merchandise. The corporate generates practically $5.7 billion in revenues and is predicated in Stamford, Connecticut.

On October twenty sixth, 2022, Silgan reported its third-quarter outcomes for the interval ending September thirtieth, 2022. Quarterly revenues rose 19.4% year-over-year, reaching $1.97 billion, whereas adjusted EPS got here in at $1.27, which was a 25% enhance versus Q3-2021. The corporate achieved file Q3 income and section revenue in all enterprise segments.

Over the previous decade, Silgan has averaged an EPS and DPS CAGR of 12.9% and 9.9%, respectively. Regardless of the work-from-home financial system progressively fading, demand for packaged and canned meals, in addition to sanitization merchandise, has remained at robust ranges.

Supply: Investor Presentation

Traders can depend on Silgan’s dividends because the firm’s payout ratio has largely remained extremely low. It presently stands at 16%. Because the firm’s IPO in 1996, Silgan has by no means reported a money-losing quarter. Its merchandise are very important for numerous client staples. Therefore, its operations are fairly secure, displayed in its 18-year dividend development file.

Click here to download our most recent Sure Analysis report on Silgan Holdings (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #5: Walgreens Boots Alliance, Inc. (WBA)

• Dividend Yield: 5.0%
• Years of Dividend Development: 47

Walgreens Boots Alliance is the biggest retail pharmacy in each the US and Europe. By means of its flagship Walgreens enterprise and different enterprise ventures, the $28 billion market cap firm has a presence in additional than 9 nations, employs greater than 315,000 individuals, and has greater than 13,000 shops within the U.S., Europe, and Latin America.

On October 13 th, 2022, Walgreens reported This fall outcomes for the interval ending August thirty first, 2022. Gross sales from persevering with operations dipped -5%, and adjusted earnings-per-share slumped -32% over the prior yr’s quarter, from $1.17 to $0.80, largely as a result of excessive COVID-19 vaccinations within the prior yr’s interval.

Supply: Investor Presentation

Walgreens’ aggressive benefit lies in its huge scale and community in an necessary and rising trade. The payout ratio stays cheap, at 42%, and may proceed so as to add an revenue ballast for dividend-growth buyers. Moreover, regardless of the decreased earnings in 2020, it must be famous that Walgreens has put collectively a really robust file in good instances and dangerous.

Click here to download our most recent Sure Analysis report on Walgreens Boots Alliance (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #4: Federal Realty Funding Belief (FRT)

• Dividend Yield: 4.3%
• Years of Dividend Development: 55

Federal Realty is without doubt one of the bigger actual property funding trusts (REITs) in the US. The belief was based in 1962 and concentrates on high-income, densely populated coastal markets within the US, permitting it to cost extra per sq. foot than its competitors. Federal Realty trades with a market capitalization of $8.3 billion at this time.

Supply: Investor Presentation

On November third, 2022, Federal Realty reported third-quarter outcomes. It generated FFO/share of $1.59 for the quarter in comparison with $1.51 within the prior-year interval. FRT additionally generated comparable property working revenue development of three.7% for the interval and eight.8% year-to-date.

The belief additionally achieved continued file ranges of leasing with 119 signed leases for 562,859 sq. ft of comparable area within the quarter, the very best third-quarter quantity on file. Federal Realty’s portfolio was 92.1% occupied and 94.3% leased, representing year-over-year will increase of 190 foundation factors and 150 foundation factors, respectively, and 10 foundation level and 20 foundation level will increase, respectively, quarter-over-quarter.

FRT options the longest dividend development streak amongst REITs, boasting 55 years of successive annual dividend will increase.

Click here to download our most recent Sure Analysis report on Federal Realty Investment Trust (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #3: Abbott Laboratories (ABT)

• Dividend Yield: 1.9%
• Years of Dividend Development: 51

Abbott Laboratories, based in 1888, is without doubt one of the largest medical home equipment & gear producers on the earth, comprised of 4 segments: Vitamin, Diagnostics, Established Prescription drugs, and Medical Units. With a market capitalization of $183 billion, Abbott Laboratories supplies merchandise in over 160 nations and employs 113,000 individuals. The corporate generated $43 billion in gross sales and $9.4 billion in revenue in 2021.

On October nineteenth, 2022, Abbott Laboratories reported third-quarter outcomes for the interval ending September thirtieth, 2022. For the quarter, the corporate generated $10.4 billion in gross sales (61% outdoors of the U.S.), representing a 4.8% lower in comparison with the second quarter of 2021.

Adjusted earnings-per-share of $1.15 in contrast unfavorably to $1.40 within the prior yr. Income was $750 million higher than anticipated, whereas adjusted earnings-per-share topped estimates by $0.21.

Supply: Investor Infographic

Abbott Laboratories’ dividend payout ratio has by no means been above 50% all through the final decade. It presently stands at a really wholesome 36%. Coupled with the truth that the corporate’s earnings-per-share has proven constant development even throughout the harshest financial environments, Abbott Laboratories’ dividend appears to be like very secure.

Click here to download our most recent Sure Analysis report on Abbott Laboratories (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #2: Canadian Nationwide Railway Firm (CNI)

• Dividend Yield: 1.8%
• Years of Dividend Development: 27

Canadian Nationwide Railway is the biggest railway operator in Canada. The corporate has a community of roughly 20,000 route miles and connects three coasts: the Atlantic, the Pacific, and the Gulf of Mexico. It handles over $200 billion value of products yearly and carries over 300 million tons of cargo.

Supply: Investor Presentation

On October twenty fifth, 2022, Canadian Nationwide Railway introduced third-quarter outcomes for the interval ending September thirtieth, 2022. Income grew 14.3% to $3.32 billion, beating estimates by $147.1 million.

Adjusted earnings-per-share of $1.57 in comparison with $1.23 within the prior yr and was $0.09 larger than anticipated. Canadian Nationwide Railway’s working ratio improved 550 foundation factors to 57.2% year-over-year and was significantly higher than the 66.6% and 59.3% figures that the corporate had within the first- and second-quarters of the yr, respectively.

Canadian Nationwide Railway advantages from working within the railway trade, one of many sectors with the very best obstacles to entry. The capital and experience required to construct new railways are super. Furthermore, the railway trade is saturated and is structured as an oligopoly, which leads to just about no new entrants and minimal competitors.

Click here to download our most recent Sure Analysis report on Canadian National Railway (preview of web page 1 of three proven beneath):

Recession-Proof Inventory #1: Johnson & Johnson (JNJ)

• Dividend Yield: 2.5%
• Years of Dividend Development: 60

Johnson & Johnson is a diversified healthcare firm and a pacesetter within the space of prescribed drugs (~49% of gross sales), medical gadgets (~34% of gross sales), and client merchandise (~17% of gross sales). Johnson & Johnson was based in 1886 and is projected to generate not less than $95 billion in income this yr.

On October 18th, 2022, Johnson & Johnson launched third-quarter earnings outcomes for the interval ending September thirtieth, 2022. Income grew 2% to $23.8 billion and was $360 million higher than anticipated. Adjusted earnings-per-share of $2.55 in contrast unfavorably to $2.60 within the prior yr however was $0.06 greater than anticipated.

Supply: Investor Presentation

Johnson & Johnson has a fairly low dividend payout ratio. This provides the corporate ample room to boost its dividend, even in a chronic recession. One among Johnson & Johnson’s key aggressive benefits is the scale and scale of its enterprise. It’s a worldwide chief in numerous healthcare classes. Ample diversification amongst its companies, subsequently, permits it to proceed to develop even when one of many segments is underperforming.

The corporate’s qualities and skill to proceed performing effectively below numerous financial circumstances are mirrored in its 60-year-long dividend development monitor file. The payout ratio stays at a wholesome 45%, which ought to enable for steady dividend will increase shifting ahead.

Click here to download our most recent Sure Analysis report on Johnson & Johnson (preview of web page 1 of three proven beneath):

Closing Ideas

Whereas no inventory is in the end recession-proof, there are specific sectors and industries that are usually extra resilient throughout financial downturns. Typically, nevertheless, important items and providers, corresponding to healthcare, utilities, and client staples, have a greater historical past by way of producing strong outcomes and persevering with to develop their dividends throughout powerful financial circumstances.

The shares we have now chosen for this text have already confirmed they’ll stand tall throughout recessionary environments fairly sufficiently, as confirmed by their prolonged dividend development monitor data. Their distinctive qualities, aggressive benefits in every trade, high quality revenues, and considerate capital allocation methods ought to enable them to proceed growing their dividends each throughout a possible upcoming recession and past.

On the lookout for extra top quality names? These different Positive Dividend databases may very well be very helpful: