Stocks to buy

3 Dividend Stocks to Buy for a Recession-Proof Portfolio

Many investors believe we’re at the point of no return or may already be in recession. “A soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending),” said JPMorgan strategists, as quoted by Fortune — leading us to look at some of the best dividend stocks for a recession.

Others say recession fears are overblown. Economist Mohamed El-Erian, for example, says there’s no reason to believe we’ll see a recession unless the Federal Reserve miscalculates what it needs to do. Even Treasury Secretary Janet Yellen isn’t anticipating a downturn in the economy thanks to jobs growth and cooling inflation.

If you fall in JPMorgan’s camp—which I do—it’s a good idea to continue protecting your portfolios. In fact, one of the best ways to do that is by recession-proofing with dividend stocks. After all, companies with strong cash flows and attractive yields tend to outperform even the worst of markets. Here are three dividend stocks you may want to consider now.

Coca-Cola (KO)

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One of the best dividend stocks for a recession is Coca-Cola (NYSE:KO). With strong demand, dependable dividends, and incredible earnings growth, Coca-Cola may be of the best stocks to consider over the long term. The company, which carries a yield of 2.94%, just announced its “61st consecutive annual dividend increase,” raising the quarterly dividend from 44 cents to 46 cents a share, or $1.84 annualized. It was payable on April 3 to shareholders of record as of March 17.

We also have to consider the company will still thrive even if the economy goes off a cliff. That’s because millions of people will still consume the beverage. Coca-Cola was also one of the clear winners in a disastrous 2022.

Enbridge (ENB)

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With a dividend yield of 6.72%, Enbridge (NYSE:ENB) is another one of the best dividend stocks for a recession. ENB is a lower-risk, high-yield opportunity that should keep your portfolio safe from chaos. For one, the company has a wide moat portfolio, including the second longest natural gas pipeline in the U.S., North America’s longest crude oil pipeline, and a high-growth renewable power generation business.

Two, the company’s diversified business, strong cash flow, and dividend growth make it just as impressive. Plus, the company provides essential services, transporting about 30% of the crude oil produced in North America and about 20% of the natural gas produced – not to mention its fast-growing green energy portfolio.

Schwab U.S. Large Cap Value ETF (SCHV)

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One of the best ways to diversify is with an ETF, such as the Schwab U.S. Large Cap Value ETF (NYSEARCA:SCHV), which carries a balanced portfolio of large-cap value stocks. With an expense ratio of 0.04%, the ETF offers exposure to companies such as Berkshire Hathaway (NYSE:BRK-A, BRK-B), Johnson & Johnson (NYSE:JNJ), Exxon Mobil (NYSE:XOM), JP Morgan Chase (NYSE:JPM), Home Depot (NYSE:HD), AbbVie (NYSE:ABBV), Pfizer (NYSE:PFE), and Merck (NYSE:MRK).

Better, you can own more for less and diversify. For example, if we wanted to buy 100 shares of the ETF, it would cost us just over $6,600. Meanwhile, if we wanted to buy 100 shares of just Home Depot, it would cost us more than $29,300 for just that one stock. Plus, the SCHV ETF has a quarterly dividend yield of 2.36%, which was last paid on March 22.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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