Conservative investors will have very limited investment alternatives for another three years. Federal Reserve disclosed that the ultra low interest rate policy will be kept until the end of 2014. Fed isn't satisfied about the economy's direction and sees recession or deflation in the cards. As a result of Fed's policies long-term Treasuries are in a Fed-induced bubble. Long-term investors probably won't be able to beat inflation over the next 10 years. We think relatively stable, recession-proof dividend stocks are viable alternatives to long-term Treasuries. The six stocks we picked usually perform much better than the rest of the market during tough times because they derive a large portion of their revenues oversees. Consumers also don't cut their demand for the products offered by these companies materially. Here are the six recession-proof stocks you should consider for your portfolio:
McDonald's Corporation (MCD) has a 2.80% dividend yield. The international fast food company has also had strong performance this year. It has a P/E ratio of 19.45 and a market cap of $101.48 billion. So far this year, MCD has returned 0.39%. Its closest competitor is YUM Brands, Inc. (YUM), the company that owns KFC, Pizza Hut and Taco Bell. YUM's market cap is far less than MCD's (at $28.77 billion) but it is priced much higher, with a P/E ratio of 24.51.
The Coca-Cola Company (KO) has been able to increase its dividends for the 49 years. It also has consistently strong growth. KO returned lost -2.44% since the beginning of the year. KO has a market cap of $154.47 billion and a P/E ratio of 12.50. It also offers a dividend yield of 2.80%, which is slightly lower than the dividend of 3.10% of its nearest competitor, Pepsico, Inc. (PEP). The difference is that KO has a larger market cap ($154.47 billion vs. PEP's $104.00 billion). It also has greater quarterly growth (45.40% vs. PEP's 13.30%). Warren Buffett is famously bullish about KO. He keeps almost 23% of Berkshire Hathaway's $59.13 billion portfolio invested in the soft drink company.
The Procter & Gamble Company (PG) has a dividend yield of 3.30% after increasing it consistently since 2002. It also has a market cap of $178.29 billion and a P/E ratio of 16.46. One of its closest competitors is Johnson & Johnson (JNJ) with a market cap of $179.51 billion. PG has greater quarterly growth, boasting an increase of 8.90% compared to JNJ's 6.80% but both are great companies.
Johnson & Johnson is PG's greatest competitor. The pair has similar market caps as noted above, but JNJ has a higher dividend yield (3.50%) and a higher operating income (25.42% versus PG's 18.55%). Both companies are solid, recession-proof, dividend-yielding investments. Some investors, like the billionaires Warren Buffett and Ken Fisher, own stakes in both companies.
Philip Morris International, Inc. (PM) offers an impressive dividend yield of 4.20%. It has a market cap of $132.67 billion, making it the largest tobacco company in the country - British American Tobacco Plc (BTI) is second with an $92.34 billion market cap. Compared to BTI, PM has greater quarterly growth (26.40% vs. BTI's 1.90%). It also has a higher operating margin and more net income.
Pfizer Inc. (PFE) has a $166.27 billion market cap and offers a 4.10% dividend yield. Its closest competitor by market cap is Novartis (NVS), which has a $132.54 billion market cap. PFE has a higher operating margin than its rival (27.79% vs. NVS's 22.84%), as well as greater revenues ($68.78 billion vs. NVS's $58.84 billion).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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