August 28, 2015
The Best Way To 'Recession-Proof'
By Nathan Slaughter
It finally happened.
The meltdown in China's benchmark Shanghai Composite Index rocked American
stocks, and caused the 10%-plus correction analysts have been projecting for
more than a year now.
It didn't last very long -- stocks rebounded nearly 4% after the six-day rout
-- but the pullback was enough to shake investor confidence in the markets.
After all, the devastation we experienced at the hands of the 2007 recession
wasn't all that long ago.
The idea of a further correction, or even a potential bear market, is enough
to frighten nearly anyone who can't afford to risk losing a significant
portion of the money in their brokerage account.
But what if I told you there was a way to help protect your portfolio
against anything from a mild bear market to a full-blown recession?
As it turns out, there is.
You see, I've spent months researching a small group of dividend-paying
securities capable of weathering nearly any market storm.
Flash crashes, bear markets, fiscal cliffs... these stocks have been through
it all. And each time they've come out stronger than ever.
I call this elite group of dividend-payers my "High-Yield Hall of Fame" stocks.
Not because their best days are behind them, but because year after year they
deliver for investors.
Many of these Hall of Fame stocks aren't names the average investor is privy
to. But during the 2007 recession, they earned investors an average return of
For comparison, by the time the recession was finally over and the market had
started its rebound, the S&P 500 was still down a whopping 21%.
Take a look at how investors who owned shares of these stocks fared during the
These often-overlooked securities reached their pre-recession price levels
years before the rest of the market caught back up.
And what's more -- not a single one of them missed a dividend payment during
the full two years. In fact, many of them managed to raise their dividends
along the way.
One of these companies, for example, is a master limited partnership (MLP)
that earned its shareholders a solid 17.5% return during the recession.
For comparison, during this same time more well-known companies like Coca-Cola
(NYSE: KO) and Google (Nasdaq: GOOGL) were down 2.3% and 10.5%, respectively.
But a rising share price isn't the only thing this firm's shareholders were
treated to during the recession. As you can see below, the company increased
its quarterly dividend payout eight straight times...
And since then the company's quarterly payout has continued to increase every
single quarter -- even after a 2:1 stock split in late 2014. Today the
quarterly payout is up 171% from where it sat at the end of the recession.
The most recent payment of $0.38 per share allows the company to boast a
market-doubling 5% yield for shareholders.
But this isn't the only one of my "Hall of Fame" stocks that has proven its
ability to weather even the most turbulent of market rough patches.
Another one of these stocks earned investors a mind-blowing 31% gain during
the recession -- the highest among the eight little-known firms on my list.
So how did it manage such a feat? Simple: it sells a product millions of
customers around the country have come to rely heavily on.
You see, the company operates as the largest distributor of propane in the
United States, moving nearly 1.4 billion gallons to more than 2 million
residential, industrial and agricultural clients around the country.
As a versatile energy source, propane is often used to heat homes and water,
and to power standby generators in case of an emergency. So regardless of how
the markets act, you can bet this firm's products will always be in high
Today the company's revenues continue to hit all-time highs. In 2014 it posted
$3.7 billion in sales -- a 46% increase over just the past three years.
At the same time its operating expenses are down, meaning it has more cash to
fill shareholders' pockets. Over the past two years, the firm has shelled out
$674 million in dividends, without borrowing a single dollar in new debt.
Its $0.92 per share quarterly payout allows this impressive company to boast
an 8% yield -- four times higher than the market average.
Now in fairness to the paid subscribers of my income-focused newsletter
High-Yield Investing, I can't give you the name of either of these stocks
right now. But I will tell you this...
As an investor, there is simply nothing you can do to avoid periods of market
turmoil. For all we know, the market could sink into a tailspin tomorrow.
But loading up on investments like the ones I've told you about today is a
simple, low-risk way to prepare your portfolio for turbulence in the market.
That's why I put together a new report on these recession-proof stocks called
"The High-Yield Hall of Fame Class of 2015."
Bottom-line: these are companies you can trust to shell out bigger
dividends... post higher returns... and rebound faster than the broader market
when things start to get shaky.
If you'd like to get the names of each of these companies, I urge you to view
my 2015 Hall of Fame stocks report today. You can access it now by
clicking this link.
Good (and safe) investing,
Chief Investment Strategist