Investing
10 Stocks to Buy Now in Case 2019 Bear Market Does Come
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Last Friday we posted a story that referenced the thoughts of Barry Bannister, the head of Institutional Equity Strategy and chief equity strategist at Stifel, where he and his team made the case that there could be little upside in 2018 and a bear market could come in 2019. Other top Wall Street strategists also have suggested that the highs printed in late January will be the highs for the year.
The Stifel view is that it is time for investors to take a more defensive posture, but that doesn’t mean selling everything and going to cash. What it does mean, is moving to sectors of the market that are less volatile and often do better in poor markets. These sectors could include utilities, consumer household products, pharmaceuticals and real estate investment trusts (REITs).
We screened Stifel’s list of potential stocks to move to and own for the potential of a bear market. The firm cites 20 potential industries to look at that typically rise if these four conditions occur:
- If the U.S. 10-year Treasury yield is peaking.
- If five-year forward inflation falls. They note in years 6 to 10 per Treasury inflation-protected securities (TIPS).
- If West Texas Intermediate crude oil declines, and in step with that, if the dollar rises.
- If the 10-year Treasury yield minus the federal funds policy rate yield curve flattens.
We chose one stock from 10 of the most conservative industries. We screened for the best dividends and for stocks that were down year to date.
Electric Utilities
Duke Energy Corp. (NYSE: DUK) is one of the leading U.S. utility companies, given its stable earnings base, as a significant portion of the company’s earnings are derived from regulated operations. Also, the company has delivered a healthy financial performance in the past and remains an attractive option for income-seeking investors.
Duke shareholders receive an outstanding 4.74% dividend. The Wall Street consensus price target is $82.07, and shares closed Friday at $75.17. The 52-week trading range is $72.93 to $91.80.
REITs
Simon Property Group Inc. (NYSE: SPG) invests in the real estate markets across the globe. It engages in investment, ownership, management and development of properties. It primarily invests in regional malls, premium outlets and community/lifestyle centers to create its portfolio. Through its subsidiary partnership, it owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.
Shareholders receive a 4.84% dividend. The consensus price target is $186.24. The shares ended Friday at $151.73, in a 52-week range of $150.15 to $176.17.
Tobacco
Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and the company’s Marlboro brand remains one of the most recognizable in the world. Many Wall Street analysts concede that the stock has solid downside support owing to the generous dividend yield, which remains at a huge premium in relation to the 10-year Treasury rate.
Altria investors are paid a 4.72% dividend. The consensus target price is set at $77.46. The stock closed Friday at $59.27, and the 52-week range is $59.65 to $77.79.
Beverages
Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, one of the world’s most valuable and recognizable brands, its portfolio features 20 billion-dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the top provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Coca-Cola investors receive a 3.69% dividend. The posted consensus price target is $50.03. The stock closed Friday at $42.33, and it has a 52-week range of $41.91 to $48.62.
Food Products
Kraft Heinz Co. (NYSE: KHC) is the third-largest food and beverage company in North America and the fifth-largest in the world, with eight $1 billion or more brands. The company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.
Shareholders are paid a 4.16% dividend. The consensus target price is $81.23. The shares closed Friday at $60.03 in a 52-week trading range of $60.49 to $93.88.
Leisure Products
Hasbro Inc. (NASDAQ: HAS) is a play and entertainment company. Its operating segments include the U.S. and Canada, International, and Entertainment and Licensing. From toys and games to content development, including television programming, motion pictures, digital gaming and a consumer products licensing program, Hasbro fulfills the fundamental need for play and connection for children and families around the world.
Investors receive a 2.99% dividend. The consensus price objective is posted at $105.71. The stock closed most recently at $84.22. Shares have traded hands between $84.51 and $116.20 in the past year.
Pharmaceuticals
Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases. It also provides neuromuscular blocking agents for use in surgery; antibacterial products for skin and skin structure infections; and cholesterol modifying medicines.
Merck shareholders receive a 3.59% dividend. The $66.60 consensus price target compares with the most recent close at $54.41 and a 52-week range of $53.12 to $66.41.
Food and Staples Retail
Walmart Inc. (NYSE: WMT) is the world’s largest retailer, operating retail stores under the formats of Walmart stores and supercenters, Neighborhood Markets and Sam’s Club locations in the United States, as well as a growing e-commerce business (including Jet.com). Internationally Walmart also operates locations in several countries, including Argentina, Brazil, Canada, China, Japan, Mexico and the United Kingdom.
Shareholders receive a 2.44% dividend. The posted consensus target is $105.32, and shares closed Friday at $85.42. The 52-week trading range is $69.33 to $109.88.
24/7 Wall St.Telecommunication Services
Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.
Verizon investors receive a 5.1% dividend. The consensus price target was last seen at $55.96. The stock closed Friday at $46.29, in a 52-week range of $42.80 to $54.77.
Health Care Equipment and Supplies
Medtronic PLC (NYSE: MDT) is a medical devices giant, and many on Wall Street saw its historical merger with Covidien, probably one of the largest in the medtech industry, as a momentous event, leading to the creation of a unique company that combines the extensive and innovative abilities of both companies. The combined company has over 85,000 employees present in more than 160 countries.
Medtronic investors receive a 2.35% dividend. The $91.40 consensus price target compares with the close on Friday at $76.55. The 52-week trading range is $76.52 to $89.72.
These 10 top companies that all pay dividends, their shares are down or flat in 2018, and they should perform well in the event of a bear market. While there is no guarantee they would trade higher, history suggests they will hold their own in bad times.
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