The stock market has not endured the deepest bear market since the Great Recession. There have been corrections and bear markets since then, but they have been short stories. With the market nearing all-time highs, the enthusiastic investor focus on a small number of tech giants, fear of inflation, fear of recession, and ongoing local and political conflicts, I expect another deep bear market in the near future. Here are three reliable dividend stocks that I will hold during a downturn.
Medtronic is an unpopular healthcare giant
Over time, my investment style has shifted to passive investing. I prefer to own companies that I believe are well managed, and I buy them when they are attractively priced relative to historical levels. In practice, that usually means buying companies like Medtronic (NYSE: MDT), which has a long history of annual dividend increases and historically high yields. Medtronic’s dividend yield reaches 49 years, and its 3.5% yield is at the high end of the stock’s historical yield range.
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Medtronic is a large medical device company. Over time, we became bloated, and unemployment crept in. Profits drop and growth slows. Management has been working to downsize and refocus the company. It’s starting to make some gains, noting that it just reported its highest annual revenue growth in a decade.
There is still a lot of work to be done, but the health care products it sells are a necessity, and I am not willing to give up the stock if there is a market downturn. When the next bear market turns into a bull market, Medtronic will still be the same well-run company and, I believe, will continue to reliably increase its profits every time.
Realty Income is inherently boring
Real Estate Investment Trust (REIT) Real Income (NYSE: O) paid a dividend of 5.2%. It has raised its dividend every year for 31 years. I once owned it, sold it short, and ended up owning it again when I bought another REIT I owned. I won’t be selling it again anytime soon. The yield is not historically high, but it is absolutely attractive.
Realty Income is the world’s largest rental REIT, with more than 15,500 properties. It focuses on single-employer commercial properties but also has exposure to industrial properties and unique assets, such as casinos and data centers. Geographically, Realty Income’s portfolio spans North America and Europe. A consistent management approach is adopted throughout the company’s operations. To sum it up, REITs are boring and reliable, as evidenced by the fact that occupancy never dropped below 96% during the Great Recession. Given the depth of that economic volatility and the associated bear market, I’m convinced that holding Realty Income through the next bear market is a good call.
