20 Best Recession-Proof Dividend Stocks for a 2022-23 Downturn

Magellan’s BBB+ credit rating insulates the firm’s cash flow from rising interest rates as well. An investment-grade rating has given Magellan access to debt capital with attractive fixed rates and long, well-laddered maturities. Past recessions and the pandemic showed us that some businesses fare better in recessions than others.

While inflation means rising prices, people will still need to pay for necessities and affordable luxuries like clothes and home goods. Alexandra Fennell, the co-founder and co-CEO of an eco-friendly women’s wellness company, suggests consignment stores, whether brick-and-mortar or online.

Recession-Proof Stock #2: Procter & Gamble

For example, if your business is in need of office supplies, you should aim to pay those expenses from the sales generated within that same period of time. Try to avoid pulling out money from your reserve to fund your operations. If the sales you’re making aren’t generating enough money, then you need to focus on better ways to reach, and grow, your target market, which brings us to the next step. These resilient cash flow sources and management’s conservative use of debt have earned the firm Recession-proof a pristine AAA credit rating and enabled the firm to raise its dividend every year since 1963. Johnson & Johnson should stay relevant for decades to come regardless of recessions and bear markets. With a strong balance sheet, A credit rating, and portfolio of recession-resistant products, Kimberly-Clark should remain a durable income investment in all manner of environments. The firm’s long-term leases provide predictable cash flow during downturns and insulate Realty from inflation.

They’ll have less cash on hand, so they’ll have a harder time matching your prices. And customers whose budgets are also under pressure will certainly appreciate your discounts.

Understanding Recession Proof

For one, people are more conscientious about sanitation in these pre-pandemic days. That means more households can afford cleaning services — and have less time to clean their homes. The growing elderly population also augments the industry’s growth as seniors likely need more help cleaning and maintaining their homes. Out of all utilities, investors are the most optimistic about the long-term growth of the renewable energy industry.

• While it’s a stretch to call them “100% recession-proof,” they are as close as it gets to guaranteed job security in tough times.
• As with most small business issues, getting ahead of the problem as quickly as possible is the safest way to protect your company.
• Even now, some small businesses recently experienced an increase in sales after the COVID-19 pandemic.

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Specialized care, therapy, and counseling

Because items sold by these firms are often some combination of addictive and stress-relieving during tough times, their sales often remain steady when recessions hit. Notable consumer staple stocks include Unilever, Procter & Gamble, Coca-Cola, Kroger and Costco Wholesale. Several of these companies even boast business portfolios stuffed with smaller brands that cater to all levels of budget and preference. Consumer staples, vices, healthcare, education, defense, utilities, budget travel, and premium luxuries are seen as recession-proof. Going forward, it’s likely that the blend of industries mentioned in this article may change. Budget travel, which also includes long distance bus transport, staycations, and public transit is a resilient sector. It performs strongly during upturns due to its necessity (those relatives can’t visit themselves) and value, which breeds loyalty and increased frequency from frugal travel-hungry flyers.

• Financial pressure or stress—to sustain a measure of performance, to return value to shareholders, or even to maintain solvency—often drives organizational decision-making, from the top on down.
• Not only do people need sustenance to survive, but food can also offer comfort and familiarity during times of stress.
• There are a lot of great companies out there like Scorpion, Hubspot, Salesforce, and many others who have developed technologies just for a small business.
• For the average small business owner, prudent practices can keep things humming along in every economic condition.

Pet care is known to withstand the pressures of an economic downturn. People love their pets and as a result, they spend more on pet care when the economy’s output decreases. With continued high demand, pet care is a recession-resistant business. Telecommunications is another industry usually performing well during economic downturns due to little fluctuation in demand. Whether via broadband, phone networks, or any other telecommunication channels, individuals still need to communicate, socially and professionally, despite poor economic conditions. Because the delivery of packages cannot be outsourced to cheaper labor markets, courier and freight services require a domestic presence.

In the meantime, the workers who are still employed have to pick up the slack. In government statistics, labor productivity usually spikes after recessions, when a smaller workforce is called upon to produce more goods and services. In practice, the extra pressure on workers can create tension with employers and is likely to reinforce the wave of unionization already sweeping through the economy. Overworked employees may simply quit as new opportunities open up in the labor market.

Demand for medical devices is more sensitive to recessions since elective surgeries can be deferred, but a healthy baseline of demand for many types of procedures helps stabilize J&J’s performance. Customers value product reliability and delivery convenience more than getting the absolute lowest price. This is partially because professional clients tend to pass on higher prices to their customers, helping Genuine Parts maintain stable margins. High used car prices and limited availability of new vehicles due to pandemic-related supply chain disruptions further support maintenance demand for existing cars. PepsiCo’s profits are insulated from rising interest rates as well since the company maintains low leverage and earns an A+ credit rating. While Manhattan needs reliable power, the city has experienced several years of population losses as residents seek cheaper options. Regulators have also been less agreeable to raising electricity and gas rates given the city’s high cost of living and already pricey power.

Plumbing and utility services

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