That includes recession-proof stocks as well as other instruments in a diversified portfolio built to provide consistent returns through market cycles. However, consumers tend to shift their eating habits from dining at restaurants to preparing more food at home. Grocery stores and packaged food makers tend to be highly recession-resistant. Likewise, other consumer staples, such as household and personal products, tend to experience stable demand in recessions.

• Recession-proof stocks refer to shares of companies or industries that are considered resilient to the adverse effects of an economic downturn.
• That said, if you’re a long-term investor, it’s not a good idea to get out of the stock market entirely or make huge changes, such as selling all of your growth stocks.
• With payouts only about 60% of next year’s earnings, NextEra has plenty of room for future increases.
• When you look for recession-proof stocks to buy, focus on low-risk, low-volatility businesses.
• But perhaps LYG is not as familiar to you as other financial stocks such as JPMorgan Chase (JPM).
• Brokerage services for Atomic are provided by Atomic Brokerage LLC («Atomic Brokerage»), member of FINRA/SIPC and an affiliate of Atomic, which creates a conflict of interest.

Discount Retailers: Benefiting From Consumer Budget Consciousness

An economic slowdown could cause businesses to reduce capital spending, which might cause them to cut back on expensive upgrades to 5G or cloud computing. Companies also tend to pull back on advertising during recessions, hurting ad-driven sectors such as social media and some streaming services. As previously noted, consumers tend to eliminate extra costs during recessions, which can affect streaming services and other entertainment options.

How do I build a recession-proof stock portfolio?

Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. All recessions are somewhat different, so it’s not possible to say that just because select stocks held up well during prior recessions, they’ll hold up well in future ones.

In fact, the company has been raising its dividend payout for more than 25 years, making it a member of the Dividend Aristocrats. The company has increased its dividend by an average of 12.6% annually over the past 10 years. It has also been buying back shares, with a buyback yield of 0.2%. That said, if you’re a long-term investor, it’s not a good idea to get out of the stock market entirely or make huge changes, such as selling all of your growth stocks.

Top 25 High Dividend Stocks Yielding 4% to 10%+

PepsiCo is one of the best stocks during recession (recession-resistant stocks). Thanks to its strong brands, its sales only decreased by 0.5% during the 2008–09 crisis, and revenue actually grew in 2020. This consumer icon is among the best recession-proof stocks to buy for long-term stability and consistent dividends, with a yield that’s more than five times the S&P 500’s 1.2% payout. The stock has an average annual return of 8.2% over the past 10 years.

EPS has increased an average of 6.2% per year over the past five years. Analysts predict that will increase to 9.3% average annual EPS growth over the next five years. Kubera’s diverse asset tracking is ideal for recession-proof strategies, helping you balance recession-resistant stocks with other investments. Its user-friendly design simplifies portfolio management for all investor levels. Utilities often offer stable dividends, making them attractive to income-focused investors during economic uncertainty. These companies offer a mix of pharmaceutical, medical device, and healthcare service businesses, providing diversification within the healthcare sector.

It also establishes a level of reliability in underlying operations. Whether you’re worried about short-term troubles or you just want a resilient portfolio that stands up to the unexpected, your approach to identifying the best stocks to buy should be similar. When you look for recession-proof stocks to buy, focus on low-risk, low-volatility businesses. These retailers often see increased traffic during recessions as consumers seek out lower-priced alternatives and focus on essential purchases. Even if a recession isn’t imminent, it’s wise to be prepared.

The Role of Cash and Emergency Funds

WEC has the highest dividend yield on our list at 4.2%, and it has increased its dividend by an average of 7.9% per year over the past decade. EPS has increased an average of 5.9% per year over the past five years. Analysts expect EPS to rise by an annual average of 7.2% over the next five years. The company has increased its dividend by an average of 11.7% per year over the past decade.

The Best Recession Stocks of January 2025

The following stocks declined during the Great Recession but recession proof stocks held up much better than the broader market, which dropped nearly 36%. These stocks and one exchange-traded fund (ETF) are listed in order of descending performance during the Great Recession. There are other types of stocks that tend to weather recessions well. Also in early April, JPMorgan pegged the odds of a U.S. recession in 2025 at 60%, up from its early March forecast of 40%.

• It has an “A” financial health rating from Morningstar and pays a dividend of 1.1%.
• During economic downturns, many people will feel uncertain about their job security.
• Another category of stocks to buy during recession is utilities companies.
• Dividend Aristocrats are a good example of recession-proof stocks with dividends.
• Certain categories of stocks tend to perform better than others during economic downturns.

Many of these companies increased their dividends and simultaneously grew their market capitalization. However, their growth rates were lower than those of many cyclical companies. Examples of defensive stocks include electric utilities and businesses that sell consumer staples such as soap and packaged foods. You don’t stop turning on the lights, showering or eating just because the economy is a bit rough, after all. The dividend payout has grown at an average annual rate of about 6.7% over the past five years. It has a “B” financial health rating—which indicates a high-quality company—from Morningstar.

In addition to Johnson & Johnson, investors may wish to consider other pharmaceutical companies. Pfizer, for example, owns several of the world’s best-selling pharmaceutical brands and vaccines. Another category of stocks to buy during recession is utilities companies. A notable example is NextEra Energy, which owns a major electricity company in Florida and a leading energy resource production enterprise. NextEra Energy benefits from rising regulated tariffs set by the government. Utilities are always go-to stocks during an economic crisis, as power is a necessity supported by strong demand through good times and bad.

Procter & Gamble makes a wide array of grooming and household products under brands such as Head & Shoulders, Crest, Pampers and Bounty. Costco provides a membership-based retail shopping experience via its online store and warehouses.

Analysts expect 8.6% average annual earnings growth over the next five years. The average annual stock return over the past decade is 13.6%. By considering these factors, investors can identify stocks that are more likely to withstand economic pressures and potentially outperform during recessionary periods. SmartAsset Advisors, LLC («SmartAsset»), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Companies with a history of solid performance during past recessions may be worth considering, too, as they have demonstrated resilience in difficult economic conditions. Stocks of companies with stable, inelastic demand for services that people need, even during a recession, produce the best results.

The Procter & Gamble Company (PG)

Very few investments are truly recession-proof, but the term refers to assets, companies, or industries considered resilient to the adverse effects of a recession. These investments often have an inverse relationship with the broader market, potentially performing well when other stocks struggle. Another example of a company with recession proof stocks is General Mills.

NextEra bills itself as the world’s largest generator of wind and solar energy and is rapidly diversifying its portfolio of energy-generation facilities. A long-term focus ensures it stays profitable and in line with any sustainability goals in the future. Real estate investments can be risky in a recession as troubled shops struggle to pay rent at their storefronts, and homeowners risk foreclosure. Although smaller companies can move more quickly to take advantage of new opportunities, they’re usually among the first to suffer when times get tough.

Furthermore, consumer staples tend to be strongly influenced by brand loyalty. While not a requirement in the selection of the best recession stocks, dividend yield and dividend growth were also considered. Dividends provide cash flow even when a stock is declining and also offer a hedge against inflation. The platform enables you to monitor your asset allocation across different classes and sectors, providing valuable insights into your portfolio’s diversification. You can easily track performance over time, set and monitor financial goals, and receive alerts for significant changes in your investments.

Dollar General is another retailer that benefits from consumers’ desire to buy discounted products. The company sells food, cleaning supplies and clothing from well-known brands and its own label at attractive prices. Over the past 10 years, its dividends have increased 2.5-fold. Bank stocks can be highly cyclical investments, as mortgages and business loans are dependent on consumers and entrepreneurs feeling good about their finances. But while the U.S. stocks are facing recession risks, LYG is cruising along just fine.