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12 Recession-Proof Stocks For Dividends In Bear Markets & Beyond


Published on December 22nd, 2023 by Bob Ciura

At Sure Dividend, we are highly focused on stocks with strong dividend growth prospects. We have identified several recession-proof stocks whose dividend prospects should remain rock-solid if a bear market occurs.

As a reminder, recession-proof stocks are stocks that are considered to be less vulnerable to economic downturns and recessionary market environments and, therefore, may be less affected by elevated volatility in the capital markets. Of course, there is no such thing as a totally recession-proof stock, as all types of securities are subject to some degree of market risk.

Nevertheless, some stocks may be less sensitive to harsh economic conditions and, therefore, may be less likely to experience as much of an impact in their financial performance during a recession. Consequently, dividend-paying, recession-poof stocks should enjoy better longevity qualities when it comes to their payouts.

Some examples of the types of companies that match this description are found among the Dividend Aristocrats. The Dividend Aristocrats are a select group of 68 stocks in the S&P 500 Index, with 25+ consecutive years of dividend increases.

You can download an Excel spreadsheet of all 68 Dividend Aristocrats (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:

 

Click here to instantly download your free spreadsheet of all 68 Dividend Aristocrats now, along with important investing metrics.

In this article, we are examining 12 dividend stocks covered in our Sure Analysis Research Database, whose recession-proof characteristics should enable them to keep growing their dividends in a bear market and beyond.

In fact, all 12 stocks featured here have been assigned an A rating in their Dividend Risk Score. They also feature a track record of at least 15 years of consecutive annual dividend increases, meaning they have already proven their ability to withstand harsh economic environments. Lastly, they have dividend yields above 1%, making them more appealing for income investors.

The stocks are listed according to their 5-year expected total returns, from lowest to highest.

Table of Contents

Recession-Proof Stock #12: Unum Group (UNM)

Unum Group is an insurance holding company that provides a broad portfolio of financial protection benefits and services. The company operates through its Unum US, Unum UK, Unum Poland, and Colonial Life businesses, providing disability, life, accident, critical illness, dental and vision benefits to millions of customers. The company generated $12 billion in revenue last year.

In late October, Unum reported (10/31/23) financial results for the third quarter of fiscal 2023. It grew its operating earnings-per-share 28% over last year’s quarter, from $1.51 to $1.94, thanks to strong growth of sales and premiums in its core segments and favorable trends in the Group Disability category. Adjusted book value per share grew 8.5%. Unum beat the analysts’ consensus by $0.03 and thus it has beaten the analysts’ consensus in 7 of the last 8 quarters.

Click here to download our most recent Sure Analysis report on UNM (preview of page 1 of 3 shown below):


Recession-Proof Stock #11: Sysco Corporation (SYY)

Sysco Corporation is the largest wholesale food distributor in the United States. The company serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities. According to estimates, the company has a 16% market share of total food delivery within the United States.

Source: Investor Presentation

On October 31st, 2023, Sysco reported first-quarter results for Fiscal Year (FY) 2024. In Q1, sales rose to $19.6 billion, a 2.6% increase from the previous year, with gross profit climbing 4.6% to $3.6 billion and gross margin reaching 18.6%. This growth is attributed to higher volumes and effective management of product cost inflation.

Operating expenses increased by 3.3%, but adjusted operating expenses only rose by 2.9%. Operating income saw a significant 9.1% increase to $803.6 million, while adjusted operating income rose to $854.3 million, up by 10.6%.

Click here to download our most recent Sure Analysis report on SYY (preview of page 1 of 3 shown below):


Recession-Proof Stock #10: Archer-Daniels Midland (ADM)

Archer-Daniels-Midland is one of the top agriculture stocks. ADM is the largest publicly traded farmland product company in the United States. Its businesses include processing cereal grains, oil seeds, and agricultural storage and transportation.

Source: Investor Presentation

Archer-Daniels-Midland reported its first-quarter results on April 25th, 2023. The company had another excellent quarter. The company reported adjusted earnings per share of $2.09 the quarter versus $1.90 in 1Q23, an increase of 9.9% year-over-year.

Revenues were up by 1.8%, from $23.6million in the first quarter of 2022 to $24.1 million. Net income increased from $1,054 million to $1,170 million, or a 11% growth for the quarter compared to the first quarter of 2022.

Click here to download our most recent Sure Analysis report on ADM (preview of page 1 of 3 shown below):


Recession-Proof Stock #9: Automatic Data Processing (ADP)

Automatic Data Processing is one of the largest business services outsourcing companies in the world. The company provides payroll services, human resources technology, and other business operations to more than 700,000 corporate customers.

With 48 years of consecutive dividend increases, it is also a member of the prestigious Dividend Aristocrats Index.

ADP posted first quarter earnings on October 25th, 2023, and results were mixed as the company beat on the bottom line, but fractionally missed the top line. Adjusted earnings-per-share came to $2.08, which was six cents better than expected. Revenue was up 7% year-over-year to $4.5 billion, but missed estimates by $10 million.

Employer Services grew 9%, which was driven by strong new business bookings and retention, as well as higher client funds interest revenue. PEO Services revenue rose 3% with new business bookings growth, but margins fell 90 basis points.

Click here to download our most recent Sure Analysis report on ADP (preview of page 1 of 3 shown below):


Recession-Proof Stock #8: Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is the largest retail pharmacy in the United States and Europe. The company has a presence in more than nine countries through its flagship Walgreens business and other business ventures.

Source: Investor Presentation

On October 12th, 2023, Walgreens reported results for the fourth quarter of fiscal 2023. Sales grew 9% but earnings-per-share fell 18% over last year’s quarter, from $0.82 to $0.67, due to high COVID-19 vaccinations and tests in last year’s period. Earnings-per-share missed the analysts’ consensus by $0.02. It was the second earnings miss after 11 quarters of earnings beats in a row.

Click here to download our most recent Sure Analysis report on Walgreens Boots Alliance (preview of page 1 of 3 shown below):


Recession-Proof Stock #7: American Financial Group (AFG)

American Financial Group (AFG) is an insurance holding company that is engaged in property and casualty insurance, focusing on specialized commercial products for businesses. In 2021, the company completed the sale of its annuity business for $3.57 billion in cash. In business for over 150 years, the company has regularly increased its quarterly dividend since 2006.

AFG reported Q3 2023 earnings on November 1st, 2023. For the quarter, earnings-per-share was $2.09, above the $1.93 per share that the company reported for the same period in 2022. The company has not yet declared a regular quarterly dividend, but it has declared a special dividend of $1.5 per share to be paid soon. With this dividend the company has declared $5.50 per share in special dividends for 2023.

Click here to download our most recent Sure Analysis report on AFG (preview of page 1 of 3 shown below):


Recession-Proof Stock #6: Chesapeake Financial (CPKF)

Chesapeake Financial is a one-bank holding company headquartered in Virginia. It was founded in 1900 and despite its long operating history, has grown to only 16 locations, offering community banking and wealth management services. The company’s market capitalization is $80 million, and it produces just under $60 million in annual revenue.

Chesapeake has increased its dividend for 30 consecutive years, although it is too small to be a Dividend Aristocrat. The bank has $1.4 billion in total assets.

Chesapeake posted third quarter earnings on October 24th, 2023, and results were largely in line with expectations. Earnings came to $2.478 million, a 58% decline from the year-ago period. The year-ago period included a non-recurring pre-tax gain of $2.2 million from the partial sale of its investment brokerage firm. On a per-share basis, earnings fell from $1.26 to $0.53.

Click here to download our most recent Sure Analysis report on CPKF (preview of page 1 of 3 shown below):


Recession-Proof Stock #5: Landmark Bancorp (LARK)

Landmark Bancorp, Inc. (LARK) is a financial holding company. The bank is predominantly engaged in the business of attracting deposits from the community and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal, and consumer loans. In addition, the company invests in certain investment and mortgage-related securities.

As of the third quarter of 2023, the company’s total assets were $1.56 billion, total gross loans were $937 million, and total deposits were $1.3 billion. Landmark Bancorp has 31 branch offices in 24 communities across the state of Kansas.

On October 31st, 2023, Landmark Bancorp released its third quarter results for the period ending September 30th, 2023. For the quarter the company reported earnings of $2.9 million which represents a 16% increase compared to the $2.5 million earned for the same quarter last year. Reported earnings per diluted share for the same periods were $0.55 and $0.48, an increase of 14.6% year-over-year.

Click here to download our most recent Sure Analysis report on LARK (preview of page 1 of 3 shown below):


Recession-Proof Stock #4: Polaris Inc. (PII)

Polaris designs, engineers, and manufactures snowmobiles, all-terrain vehicles (ATVs) and motorcycles. In addition, related accessories and replacement parts are sold with these vehicles through dealers located throughout the U.S. The company operates under 30+ brands including Polaris, Ranger, RZR, Sportsman, Indian Motorcycle, Slingshot and Transamerican Auto Parts.

On October 24th, 2023, Polaris reported Q3 results for the period ending September 30th, 2023. For the quarter, revenue decreased 3.8% to $2.25 billion, which was $20 million less than expected. Adjusted earnings-per-share of $2.71 compared unfavorably to $3.25 in the prior year and was $0.02 less than anticipated.

Source: Investor Presentation

For the quarter, Marine sales declined 48%, On-Road fell 19%, and Off-Road, the largest component of the company, improved 6%. Sales for Marine and On-Road were lower due to a decrease in volumes. Off-Road benefited from strength in snowmobile demand and gains in Parts, Garments, and Accessories. Gross margin contracted 127 basis points to 22.6%.

Click here to download our most recent Sure Analysis report on PII (preview of page 1 of 3 shown below):


Recession-Proof Stock #3: Bristol-Myers Squibb (BMY)

Bristol-Myers Squibb is a leading drug maker of cardiovascular and anti-cancer therapeutics with annual revenues of about $47 billion.

For the 2023 third quarter, revenue declined 2.2% to $10.97 billion, which was in-line estimates. Adjusted earnings-per-share of $2.00 compared to $1.99 in the prior year and was $0.23 more than expected.

Adjusting for unfavorable currency exchange, revenue was down 3% for the quarter. U.S. revenues declined 4% to $7.6 billion while International was higher by 2% to $3.3 billion. When adjusting for currency exchange, International markets grew 1%.

Much of the decline was due to the result of generic competition for Revlimid, which was down 41% to $1.23 billion. Eliquis, which prevents blood clots, grew 2% to $1.8 billion.

Click here to download our most recent Sure Analysis report on BMY (preview of page 1 of 3 shown below):


Recession-Proof Stock #2: Sonoco Products (SON)

Sonoco Products provides packaging, industrial products and supply chain services to its customers. The markets that use the company’s products include those in the appliances, electronics, beverage, construction and food industries.

The company generates more than $7 billion in annual sales.

Source: Investor Presentation

On October 31st, 2023, Sonoco Products reported third quarter results for the period ending October 1st, 2023. For the quarter, revenue decreased 9.5% to $1.7 billion, which was $30 million below estimates. Adjusted earnings-per-share of $1.46 compared unfavorably to $1.60 in the prior year, but this was $0.18 more than expected.

For the quarter, Consumer Packaging revenues were down by 9% to $938 million due to lower volumes and prices. Flexible packaging, rigid paper, and metal packaging business performed well. Industrial Paper Packing sales fell 12% to $580 million due to weaker global demand for paper and converted paper products. All Other decreased 3% to $192 million as weaker volume and mix were only partially offset by pricing action.

Click here to download our most recent Sure Analysis report on Sonoco (SON) (preview of page 1 of 3 shown below):


Recession-Proof Stock #1: 3M Company (MMM)

3M is an industrial manufacturer that sells more than 60,000 products used daily in homes, hospitals, office buildings, and schools worldwide. It has about 95,000 employees and serves customers in more than 200 countries.

On October 24th, 2023, 3M reported earnings results for the third quarter.

Source: Investor Presentation

For the quarter, revenue declined 3.6% to $8.3 billion, but this was $280 million above estimates. Adjusted earnings-per share of $2.68 compared to $2.69 in the prior year, but was $0.33 more than projected.

Adjusted organic growth fell 3.1% for the period. Health Care had organic growth of 2.4%, while Transportation & Electronics, Consumer, and Safety & Industrial were down 1.8%, 7.2%, and 5.8%, respectively.

Click here to download our most recent Sure Analysis report on 3M Company (preview of page 1 of 3 shown below):

Final Thoughts

While no stock is ultimately recession-proof, there are certain sectors and industries that tend to be more resilient during economic downturns. In general, however, essential goods and services, such as healthcare, utilities, and consumer staples, have a better history in terms of generating solid results and continuing to grow their dividends during tough economic conditions.

The stocks we have selected for this article have already proven they can stand tall during recessionary environments quite sufficiently, as proven by their extended dividend growth track records.

Looking for more high quality dividend stocks? These other Sure Dividend databases could be very useful:

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