Stocks That Outlast Wars… Recessions… Financial Panics…

In particular, I prefer companies with a lengthy history of boosting dividends. These companies likely operate in businesses that generate steady free cash flows. A history of increasing dividends over decades suggests these companies have continued to generate returns for their owners in both good and bad economies, a hallmark of any true legacy asset.

Companies with stable, recession-resistant businesses.
It’s no coincidence that successful companies like Campbell Soup Company (NYSE:CPB) and The Coca-Cola Company (NYSE:KO) operate in different capacities in the food and beverage industries.

While demand for many products recede when the economy is weak, consumers still need to eat and drink regardless of prevailing economic conditions. Demand for these basic products is relatively insensitive to the economy — that’s one major reason brands like Campbell’s and Coca-Cola have survived periods of extreme economic turmoil such as the Great Depression.

No company is truly recession-proof, but legacy asset companies sell products or services with enough consistent demand that they can continue to generate profits whether the economy is in a boom or a bust.

A wide economic moat.
An economic moat is a competitive advantage that helps a firm maintain profits in the face of competition. There are many different types of moats.

Mars’ (maker of M&M’s and Snickers) moat is the company’s strong brand image. Consumers can buy chocolate bars and candies from thousands of different producers worldwide; there’s nothing truly unique about a sugary sweet. But consumers can buy a Snickers bar, Dove bar or Milky Way from only one manufacturer — Mars. Consumers will continue to reach for their favorite brands regardless of how many cheaper alternatives may be on the market.

Even more important, well-known brands tend to command higher prices than generic alternatives, meaning that companies owning well-established brands tend to earn higher operating margins on the products they sell.

That’s the power of a great brand — one of the most important legacy assets — in action.