20 Best Recession-Proof Dividend Stocks for a 2022-23 Downturn

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In this article, we’ll help investors understand when high-yield dividend stocks offer real safety and when they should be avoided. We’ll also give you some sectors that are among the best for finding quality high-yield dividend stocks. Companies in the Utilities and Consumer Staples sectors tend to pay much higher dividends than companies in other sectors.

With fewer people being able to afford a home, the need for multifamily real estate assets will grow, right along with Walker & Dunlop’s revenue. While sentiment regarding the hosing sector may be down, the lack of activity has actually turned Walker & Dunlop into one of the best dividend stocks to buy now. Many investors will look for stocks with a high dividend for investment. However, caution should be exercised as many high dividend stocks have unique business structures that may be risky. Factors to consider should include positive dividend growth metrics and the dividend payout ratio .

The company plans to increase revenue growth into the mid-to-high-single digits range in 2023 and 2024, then accelerate annual sales growth to around 12% by 2026. Margins, meanwhile, are expected to rebound to around 52% next year and in 2024 and peak at about 56% by 2026. Green signifies best-performing dividend yield quintile in sector, red signifies the worst. The other attribute conservative income investors might appreciate is the stock’s low volatility. During the financial crisis, DUK’s shares slumped just 34% while the S&P 500 lost 55%.

In fact, EPR trades at 10.5 times its expected 2022 funds from operation , which should give investors peace of mind that they’ll continue to receive their monthly dividend payments. Digital Realty maxitrade review Trust is an REIT that specializes in physical real estate assets that house data centers. In all, Digital Realty’s assets cover 284 facilities in 48 different cities across 23 countries.

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While these options may be attractive in some environments, during uncertain times some corporations may be more cautious and choose to hold on to their cash in case of another economic downturn. Companies may also choose to use excess cash to initiate a dividend or increase their existing dividend payouts. This excess cash should allow businesses with existing dividends to maintain, if not grow, their dividends. And while interest rates are beginning to rise, they’re still low by historical standards, which means dividend-paying stocks continue to offer attractive yields relative to many fixed-income asset classes. FIGURE 3 summarizes the dividend yield for the S&P 500 Index from 1960–2021.

But it’s also sustained nearly 25% average annual gains in earnings per share over the same period—that’s the best earnings growth rate of all the stocks on our list. One useful measure to gauge the sustainability of a company’s dividend payments is the dividend payout ratio , which measures total dividends divided by net income. It tells investors how much of the company’s net income is being paid to shareholders in the form of dividends compared with how much the company is retaining to invest in further growth. The Washington D.C.-based firm’s 3.5% dividend yield calls out to income-seeking investors. But our analysis shows there’s more to it than just a market-beating payout.

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This reflects the lack of competition in their service territories, the reasonable returns on capital investments they are allowed to earn by regulators, and the non-discretionary nature of their services. Increased fuel efficiency and a shift to electric vehicles could weigh on long-term demand for gasoline. But investors who share our belief that this transition will take place over many years or decades may still find Magellan’s overall risk profile and high dividend attractive. Magellan Midstream Partners has paid distributions without interruption since 2001, reflecting the master limited partnership’s conservative financial policies and steady cash flow. The best recession-proof stocks can withstand high inflation and rising interest rates that threaten to push the economy into a downturn as soon as late 2022.

• Customized to investor preferences for risk tolerance and income vs returns mix.
• In total, Kinder Morgan has at least an invested interest in approximately 85,000 miles of pipelines and 152 terminals.
• Indeed, 67 consecutive years of annual dividend increases is proof positive of the company’s commitment to returning cash to shareholders.
• Schedule monthly income from dividend stocks with a monthly payment frequency.
• But investors who share our belief that this transition will take place over many years or decades may still find Magellan’s overall risk profile and high dividend attractive.

Of the market’s high yield stocks, EPR Properties’ 8.58% dividend yield not only looks sustainable, but may even have room to grow. Brookfield Renewable Partners is an extension of Brookfield Asset Management and a company that looks positioned to benefit from a “greener” future. As the company’s name suggests, Brookfield Renewable Partners owns and operates renewable energy infrastructure. With most already moving on from fossil fuels, Brookfield Renewable is expected to pick up a lot of the slack. In doing so, Brookfield has one of the safest, most diversified portfolios of clean energy assets.

A combination of acquisitions, organic growth and stronger margins have helped Roper juice its dividend without stretching its profits. And while the yield might not look like much, patient investors have come to appreciate what ROP’s steady dividend increases have done for their returns. As a result, the five-year compound annual growth rate of AOS‘ dividend now stands at more than 17%. The five-year annualized dividend growth rate, meanwhile, tops 158%. In early November, MPLX reported (11/1/22) financial results for the third quarter of fiscal 2022.

Dividend stocks are becoming increasingly popular among investors because of their ability to generate regular income. Analysts around the world are recommending adding dividend stocks to portfolios to fight the current economic instability. One reason why second-quintile dividend-paying stocks came out ahead is because the first-quintile’s excessive dividend payouts haven’t always been sustainable. The best way to measure whether a company will be able to pay a consistent dividend is through the payout ratio.

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The logistics company last raised its semiannual dividend in May 2022, to 67 cents a share from 58 cents a share. The company last raised its dividend in February 2022, by 10.1% to 42.5 cents per share per quarter. The most recent hike came in January 2022 – a 4% bump to the quarterly payout to 26.25 cents per share. For one thing, regular dividend increases lift the yield on an investor’s original cost basis.

Rather, this consumer staples giant is all about defense and dividends. And, indeed, the dependable and defensive nature of Clorox’s business has allowed the company to raise its annual dividend for more than four decades. The most recent hike came in July 2022 with a 2% bump to $1.18 per share per quarter. That payout has been on the rise for 38 consecutive years and has been delivered without interruption for 78. Most recently, Brown-Forman last upped the quarterly ante in November 2021, by 5% to 18.85 cents per share. Unlike many of the best dividend stocks on this list, you won’t have a say in corporate matters with the publicly traded BF.B shares.

Exxon’s relatively low leverage and AA- credit rating provide further insulation. Coupled with Duke’s BBB+ credit rating, the firm should continue growing its earnings and defending its track record of paying safe dividends since 1927. The partnership has survived past recessions with its dividend intact. And oil and gas prices may hold at higher levels during the next downturn given the current inflationary environment. Stanley Black & Decker remains committed to being one of the best dividend stocks for 2022, as evidenced by its latest actions. Despite its prominent position in the oil and gas industry, however, Kinder Morgan’s share price has been relatively suppressed by the pandemic.

CLX boasts a reasonable payout ratio and ample free cash flow, which should ensure a 46th consecutive increase to the dividend in 2023. Indeed, Cardinal Health has upped the ante on its annual payout for 36 years and counting. The Aristocrat last raised its disbursement in May 2022, declaring a 1% increase in the quarterly dividend to 49.57 cents per share. Like the rest of the medical device industry, CAH faced challenges during the pandemic as patients put off elective surgeries. But the company still managed to generate ample free cash flow and the dividend increases such cash flow supports.

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This means the stock and fundamentals outperform 65% of all stocks in IBD’s database. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products. By choosing a fund, you won’t have to worry about closely tracking the individual stocks in the portfolio because the fund’s diversification should shelter you from having too much exposure to a single stock.

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According to the company’s latest earnings report, same-store revenue grew 19%. The jump in revenue translated into a 37.5% increase in funds from operations . Wide-moat-rated Gilead Sciences currently trades at a 19% discount to Morningstar analyst Karen Andersen’s $77 fair value estimate. Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, with the core of its portfolio focused on HIV and hepatitis B and C.

ETFs and funds that prioritize investments based on environmental, social and governance responsibility. Shareholder yield includes dividends and share buybacks or issuances. EPS has increased more than 8% per year, on average, over the last five years.

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Buffett is the master of value investing, and dividends are a big part of that. Unfortunately, though, many of the dividend stocks owned by Berkshire Hathaway seem to only be ones Buffett could love. This is actually a pretty poor showing for Buffett this year — a year where dividends have largely protected investors from giant losses. Berkshire Hathaway owns 17 U.S.-listed stocks that yield more than the S&P 500’s 1.7%.

We think patent protection on newer HIV regimens and Gilead’s continued dominance in the hepatitis C market will be enough to ensure strong returns for the next couple of decades. Gilead’s expertise in infectious diseases and single-pill formulations is a part of its research and development strategy, which we see as one of the strongest intangible assets supporting the firm’s wide moat. While we have factored these threats into our analysis, we don’t see them as material to our valuation or moat rating. On the pipeline front, GSK has shifted from its historical strategy of targeting slight enhancements toward true innovation. It is also focusing more on oncology and immune system, with genetic data to help develop the next generation of drugs.