There are several stocks that seem to exist outside the economy, dependent on very little other than consumer demand for them. While no stock is fully recession proof, there are those that almost seem to defy the odds. Surprisingly, many of these “recession-proof” stocks also bear dividends. Our list includes a fast food company, a soft drink giant, two cigarette companies a consumer packaged goods and a pharmaceutical company. Here are the 7 recession-proof high dividend stocks:
McDonald’s Corporation (MCD) has a 3.15% dividend yield. The international fast food company has also had strong performance this year. It is currently trading at $88.78, which is near the top of its 52-week range. It has a P/E ratio of 17.98 and a market cap of $91.70 billion. So far this year, MCD has returned 19.01%. Its closest competitor is YUM Brands, Inc. (YUM), the company that owns KFC, Pizza Hut and Taco Bell, but YUM’s market cap is far less and it has returned just 7.32% since the start of 2011. With numbers like that, it’s no wonder respected fund managers like Jim Simons of Renaissance Technologies is a fan of the company. He keeps $207 million of the Renaissance Technology portfolio invested in MCD.
The Coca-Cola Company (KO) has been able to increase its dividends for the 49 years. It also has consistently strong growth. KO returned 3.74% since the beginning of the year while the S&P 500 has lost around 7%. KO has a market cap of $155.61 billion and a P/E ratio of 12.59. It also offers a dividend yield of 2.80%, which is slightly lower than the dividend of 3.25% of its nearest competitor, Pepsico, Inc. (PEP). The difference is that KO has a larger market cap ($155.26 billion vs. PEP’s $100.18 billion). It also has greater quarterly growth (46.80% vs. PEP’s 13.70%) and a higher operating margin at 23.02% compared to PEP’s 16.07%. Warren Buffett is famously bullish about KO. He keeps over 25% of Berkshire Hathaway’s $52.9 billion portfolio invested in the soft drink company.
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