There may be concern amongst some buyers that the stock market has gotten forward of itself and is now richly valued. Whereas predicting when the market will fall is tough, if security and preservation of capital is your concern, there are stocks that match the invoice.
These corporations have defensive traits, together with providing on a regular basis merchandise and rising dividends, which permit the stocks to carry up when the general market goes down sharply.
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Colgate-Palmolive (NYSE:CL) makes and sells toothpaste (accounting for 40% of the market) and toothbrushes underneath the Colgate model. A few of its different merchandise are soaps, deodorants, and dishwashing liquids that it sells underneath standard names like Palmolive, Softsoap, Velocity Stick, and Ajax. These can be found around the globe, in additional than 200 international locations.
The mixture of well-recognized, extremely considered merchandise, and the manufacture of fundamental requirements means Colgate-Palmolive does properly it doesn’t matter what is occurring, together with a recession and international pandemic. With weak financial progress in lots of international locations and COVID-19 circumstances surging, the corporate’s third-quarter adjusted gross sales rose by 7.5% to $4.2 billion, and earnings elevated by 11% to $0.79 a share.
This type of enterprise generates a wholesome and secure cash movement. For the primary 9 months of 2020, Colgate-Palmolive’s working cash movement was $2.eight billion, and its capital expenditures have been $249 million. This meant there was loads of free cash movement to pay the $1.2 billion of dividends.
It is no marvel that the corporate has constructed an amazing dividend file, paying one since 1895. Higher nonetheless, it has raised the cost yearly for the final 57 years, and it at present affords a 2.2% dividend yield. This makes Colgate-Palmolive a Dividend King, which is a member of the S&P 500 that has raised dividends for at the least 50 straight years.
Procter & Gamble
Procter & Gamble (NYSE:PG), based in 1837, has confirmed it will probably survive by promoting a number of merchandise, comparable to laundry detergents, diapers, paper towels, shaving merchandise, and shampoo. A few of its manufacturers are Downy, Achieve, Tide, Luvs, All the time, Bounty, Gillette, and Head & Shoulders.
These manufacturers will not be solely well-known around the globe (bought in 180 international locations), however individuals purchase them it doesn’t matter what the economic system is doing. In its first fiscal quarter, which ended on Sept. 30, adjusted gross sales grew by 9% to $19.Three billion and earnings per share have been 22% greater to $1.67.
With rising gross sales and earnings, it produces an growing quantity of free cash movement. In the newest quarter, it generated $3.9 billion, paying out $2 billion of dividends. For the prior yr, its free cash movement was $14.Three billion, and it paid $7.eight billion of dividends.
With this stability and cash movement, Procter & Gamble has paid a dividend for 130 straight years and raised it for the final 64 years. The dividend yield is 2.4%.
Walmart ((NYSE:WMT)) began its first low cost retailer almost six many years in the past, and it has turn into the world’s largest retailer by holding down prices and passing these saving on to its prospects. Providing ultra-low costs is an efficient technique, and the corporate has turn into so profitable, it serves 265 million prospects weekly at its shops and on-line.
Promoting a wide range of gadgets at low costs, Walmart does properly in varied financial environments. Its fiscal third-quarter (which ended on Oct. 31) adjusted gross sales elevated by greater than 6% to $135.eight billion, and earnings per share have been $1.34, 16% greater.
The corporate is a cash machine, too. For the primary 9 months of the yr, Walmart‘s free cash movement was $16.Four billion, permitting it to simply pay the $4.6 billion of dividends.
With regards to elevating dividends, it additionally has a robust file. Since initiating a cost in 1974, it has boosted the quantity yearly. That is would not make it a Dividend King but, however it’s heading in that route. Walmart‘s dividend yield is 1.5%.
In fact, it’s arduous to focus on what to put money into when exterior occasions take over and panic units in. However these three stocks supply an oasis with secure companies that do properly irrespective of the circumstances. Moreover, their sturdy observe file of elevating dividends offers a pleasant earnings stream when you look ahead to normalcy to return.