The stock market hasn’t endured a deep bear market since the Great Recession. There have been corrections and bear markets since that point, but they have been brief affairs. With the market near all-time highs, an intense investor focus on a small number of tech giants, inflation fears, recession fears, and geopolitical conflicts raging, I’m expecting another deep bear market in the near future. Here are three reliable dividend stocks that I’ll hold right through the downturn.
Medtronic is an out-of-favor healthcare giant
Over time, my investment approach has shifted toward more conservative investments. I prefer to own companies that I believe are well run, buying them when they are attractively priced relative to historical levels. In practice, that usually means buying companies like Medtronic (MDT +1.48%), which have long histories of annual dividend increases and historically high yields. Medtronic’s dividend streak is up to 49 years, and its 3.5% yield is toward the high end of the stock’s historical yield range.
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Medtronic is a large medical device company. Over time, it got bloated, and inefficiencies crept in. Profitability sagged and growth slowed. Management has been working to slim down and refocus the company. It is starting to gain some traction, noting that it just reported its highest annual revenue growth in a decade.
There’s still more work to be done, but the healthcare products it sells are necessities, and I’m not about to give up on the stock if there’s a market downturn. When the next bear market turns into a bull market, Medtronic will still be the same well-run company and, I believe, will continue to reliably increase its dividend all along the way.
Today’s Change
(1.48%) $1.18
Current Price
$80.98
Key Data Points
Market Cap
$103B
Day’s Range
$79.71 – $81.87
52wk Range
$73.31 – $106.33
Volume
12.4M
Avg Vol
10.2M
Gross Margin
60.27%
Dividend Yield
3.53%
Realty Income is boring by nature
Real estate investment trust (REIT) Realty Income (O +1.74%) has an attractive dividend yield of 5.2%. It has increased its dividend annually for 31 years. I owned it once, sold it short-sightedly, and then ended up owning it again when it bought another REIT I owned. I won’t be selling it again anytime soon. The yield isn’t historically high, but it is attractive on an absolute basis.
Realty Income is the largest net lease REIT, with over 15,500 properties. It focuses on single-tenant retail assets but also has exposure to industrial properties and to more unique assets, such as casinos and data centers. Geographically, Realty Income’s portfolio spans North America and Europe. A conservative management approach is taken throughout the company’s operations. To sum it up, the REIT is boring and reliable, as evidenced by the fact that occupancy didn’t drop below 96% during the Great Recession. Given the depth of that economic downturn and the associated bear market, I’m confident that holding Realty Income through the next bear market is a good call.
Today’s Change
(1.74%) $1.08
Current Price
$63.12
Key Data Points
Market Cap
$58B
Day’s Range
$62.40 – $63.26
52wk Range
$55.86 – $67.94
Volume
8.3M
Avg Vol
5.9M
Gross Margin
50.46%
Dividend Yield
5.22%
Nucor could be the best-run steel maker in the world
I bought Nucor (NUE 3.66%) when it was deeply out of favor. The stock has fully recovered, and it is no longer cheap. In fact, the steel maker is one of the best-performing stocks in my portfolio. The yield is a very low 0.9%, which is even lower than the S&P 500 index‘s (^GSPC 0.05%) already tiny 1% yield. I expect the stock to get crushed if there’s a bear market and/or recession. I’m not selling.
Today’s Change
(-3.66%) $-9.11
Current Price
$239.78
Key Data Points
Market Cap
$57B
Day’s Range
$237.82 – $246.91
52wk Range
$128.46 – $270.90
Volume
2.3M
Avg Vol
1.6M
Gross Margin
13.98%
Dividend Yield
0.89%
Steel is a highly cyclical industry, yet Nucor has become a Dividend King, with over 50 consecutive annual dividend hikes. It has a diversified business, modern, flexible electric arc steel mills, and strong employee relations. Despite industry swings, the company has lost money only once in the last four decades. It is the kind of stock you keep on your wishlist and buy while everyone else is selling. The next bear market could be your opportunity to jump aboard.
Two worth looking at and one worth watching
Medtronic appears to be on sale. Realty Income is reasonably priced. And Nucor is expensive, but a good wishlist pick. All three are incredibly well run, and I have no plans to sell any of them in a bear market. Or during a bull market, either. I’m channeling my inner Warren Buffett and holding for the long term so I can benefit from each business’s growth over time. Given their past histories of success, I expect them to keep growing no matter what the market does.
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