13 Recession Proof Stocks to Invest In (& Better Alternatives)
Investing in recession-proof stocks can be worthwhile, especially if you’re looking for stability and growth during unpredictable economic conditions.
But it’s also worth exploring profitable alternative investments (like fine wine) to navigate stock market uncertainty and bear market problems.
So, let’s explore 13 recession proof stocks to invest in, the industries that thrive during economic downturns, and why fine wine is an excellent investment during recessions.
Further reading
- Check out the 15 Best Wine Stocks and their performance.
- Here's a guide covering Why Investing in Wine is Safer Than Investing in Stocks.
- With recession worries continuing, explore a few tips on How to Prepare for a Recession.
13 Recession Proof Stocks Worth Investment in 2023
These are the recession resistant stocks to add to your investment portfolio:
- Diageo plc (NYSE: DEO)
- NextEra Energy Inc. (NYSE: NEE)
- The Procter & Gamble Company (NYSE: PG)
- Johnson & Johnson (NYSE: JNJ)
- Thermo Fisher Scientific (NASDAQ: TMO)
- Dollar General Corporation (NYSE: DG)
- Home Depot Inc. (NYSE: HD)
- Bunge Limited (NYSE: BG)
- Dollar Tree (NASDAQ: DLTR)
- UnitedHealth Group Incorporated (NYSE: UNH)
- Walmart Inc. (NYSE: WMT)
- Synopsys, Inc. (NASDAQ: SNPS)
- Target Corp. (NYSE: TGT)
1. Diageo plc (NYSE: DEO)
Diageo plc is a globally renowned alcoholic beverage producer.
The company’s annual revenue in 2022 topped $20.5 billion, up over 20% from the previous year.
Diageo’s share price has steadily increased annually since 1998 (the only exception was in 2020 during the COVID pandemic). The company closed out 2022 with a final dividend of $0.59 — a 5% increase over the previous year’s dividend.
So, this is one of the best stocks that deserve a spot in your portfolio.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 98.97B USD
Volume: 518K
P/E Ratio: 20.42
Dividend Yield: 2.31%
2. NextEra Energy Inc. (NYSE: NEE)
NextEra Energy is the world’s largest producer of wind and solar energy. With plans to double its solar and wind capacity to at least 46GW by 2025, the company is in a strong position to take advantage of the energy transition.
Additionally, the utility company has increased its dividend at an annual compound growth rate of almost 11%.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 139.47B USD
Volume: 7.86M
P/E Ratio: 17.06
Dividend Yield: 2.71%
3. The Procter & Gamble Company (NYSE: PG)
This multinational consumer goods company manufactures and distributes personal health and hygiene products. Investors favor P&G for its bottom-line growth (profits or earnings), which ensures reliable and predictable dividend payments.
This stock has outperformed the Consumer Staples Select Sector SPDR Fund over the last five years.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 369.84B USD
Volume: 6.33M
P/E Ratio: 26.60
Dividend Yield: 2.40%
4. Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson is one of the largest healthcare companies by market cap. Its oncology and immunology areas (two of the largest and fastest-growing sectors in the healthcare industry) are its main focus points.
The company also develops medical devices and pharmaceuticals, and its stock usually remains stable regardless of economic conditions.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 454.82B USD
Volume: 12.86M
P/E Ratio: 35.49
Dividend Yield: 2.72%
5. Thermo Fisher Scientific (NASDAQ: TMO)
Thermo Fisher Scientific supplies analytical instruments, life science products and services, and laboratory services. The company has offered an average annual return of more than 23% over the last decade.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 24.35B USD
Volume: 1.31M
P/E Ratio: 22.19
Dividend Yield: 1.85%
6. Dollar General Corporation (NYSE: DG)
This discount retailer operates a chain of stores across the United States. Analysts remain bullish on Dollar General, predicting its share price could top $285 by 2025, representing a 73% increase from 2023.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 36.16B USD
Volume: 2.10M
P/E Ratio: 15.53
Dividend Yield: 1.43%
7. Home Depot Inc. (NYSE: HD)
This is the largest home improvement company in the United States. It has seen its profit margin climb from 6% to 11% over the last decade. Further, with its latest supply chain investments, Home Depot’s profits should continue rising for the next 10 years.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 332.89B USD
Volume: 2.90M
P/E Ratio: 20.16
Dividend Yield: 2.52%
8. Bunge Limited (NYSE: BG)
Bunge Limited is an agribusiness and food company headquartered in Missouri, USA. It has an Altman Z-Score of 4.62, suggesting it’s a fiscally stable company. (The Altman Z-score gauges how likely a company is to go bankrupt. A score above 3 suggests bankruptcy is unlikely).
From 2020 to 2023, Bunge’s average Revenue per share Growth Rate topped 14%.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 16.90B USD
Volume: 1.27M
P/E Ratio: 8.67
Dividend Yield: 2.36%
9. Dollar Tree (NASDAQ: DLTR)
Dollar Tree is a discount store company that usually generates stable earnings and cash flow during recessions. So, it’s a reliable company to invest in during rough economic conditions.
It has over 15,000 stores and generates an annual revenue of almost $29 billion.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 32.46B USD
Volume: 1.62M
P/E Ratio: 23.82
Dividend Yield: N/A
10. UnitedHealth Group Incorporated (NYSE: UNH)
UnitedHealth Group Incorporated is an insurance and managed healthcare firm. The company recently boosted its dividend by 15%, marking the 33rd consecutive year with no dividend cuts.
Since March 2010, the S&P500 has offered total returns of 375%. By comparison, UNH’s total returns top 1,700%
Historical 5-Year Performance
Source: Google Finance
Market Cap: 470.57B USD
Volume: 3.82M
P/E Ratio: 22.73
Dividend Yield: 1.48%
11. Walmart Inc. (NYSE: WMT)
Walmart is a discount retailer that has thrived during almost any economic downturn.
It has a reliable dividend growth history, which makes it a dividend aristocrat. Simply put, a dividend aristocrat is a company that has increased its dividend payout annually for at least 25 years.
Recent investments into automation have put the company in a good position to maintain its low prices and spur growth during uncertain economic conditions.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 430.85B USD
Volume: 4.51M
P/E Ratio: 38.56
Dividend Yield: 1.43%
12. Synopsys, Inc. (NASDAQ: SNPS)
Synopsys is an electronic design automation (EDA) company specializing in silicon design and verification and software security solutions. It also supplies tools and services to the semiconductor design and manufacturing industry.
The stock performs well because the semiconductor industry tends to be relatively stable, even during a recession.
In fact, Synopsys outperformed the S&P 500 by 9.9% during the 2008 recession and by 70% during the 2020 COVID crisis.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 65.19B USD
Volume: 788.40K
P/E Ratio: 72.31
Dividend Yield: N/A
13. Target Corporation (NYSE: TGT)
Target is the third largest discount retailer in the US, with 1,948 stores as of Q4 2022.
This company is a Dividend King, which means it has raised its dividend for over 50 consecutive years. Over the last 10 years, Target has increased its dividend by 150%, making it a fantastic recession proof stock to add to your investment portfolio.
Historical 5-Year Performance
Source: Google Finance
Market Cap: 60.49B USD
Volume: 4.02M
P/E Ratio: 22.29
Dividend Yield: 3.36%
Which Industries Thrive During Recessions?
These are the industries that are usually resistant to recessions:
- Fine Wine and The Alcoholic Beverage Industry
- Consumer Staples
- Utility Companies
- Commodities
- Healthcare
- Discount Retailers and Grocery Stores
- Cosmetics
1. Fine Wine and The Alcoholic Beverage Industry
Wine, beer, and distilled beverages are usually in high demand - even during a recession. For example, during the Great Recession in 2008, alcohol sales grew by more than 9%.
Let's look at fine wine, in particular.
Fine wine investment is less volatile than investing in the stock market. Between 2014 and 2023, fine wine offered a total return of around 82%. That's a compound annual growth rate of over 6.5%.
Also, during the Great Recession in 2008, stocks dropped by 52%, while fine wine produced about 25.51% returns on investment!
2. Consumer Staples
Consumer staples are always in high demand despite the state of the economy.
During a recession, people tend to shift from dining at restaurants to preparing food at home. So, it might be risky to invest in restaurant stocks during such periods.
3. Utility Companies
The demand for electricity, waste management, gas, and water remains stable during a recession. So, the utility sector is a recession proof industry that can do wonders for your investment portfolio.
Besides, utility companies have a stable cash flow and limited competition.
4. Commodities
Commodities such as metals and grains usually remain in high demand during an economic recession. So, it might be worth adding them to your portfolio.
One of the easiest ways to invest in commodities is through a mutual fund that invests in the commodity market. For example, you could go for a mutual fund that invests in energy, mining, or agricultural companies.
5. Healthcare
The healthcare sector is also a recession proof industry. Similar to consumer staples, healthcare services are always in high demand despite the state of the economy.
Global management consulting firm McKinsey forecasts the healthcare industry to grow at a compound annual growth rate of 4% between 2021 and 2026.
6. Discount Retailers and Grocery Stores
Discount retailers and grocery stores are usually resistant to a recession. That’s because customers typically buy lower-priced items during a crisis like this.
Some of the best consumer staples stocks investors should check out include Walmart Inc. (NYSE: WMT) and Target Corporation (NYSE: TGT).
7. Cosmetics
People usually continue spending on beauty products and cosmetics despite economic recessions.
Some of the best cosmetics stocks to invest in include Estee Lauder Companies Inc (NYSE: EL) and Coty Inc (NYSE: COTY).
Now:
It might be worth investing in growth stocks, penny stocks, gold, real estate, and dividend stocks during a recession.
However, investing in the stock market is usually a tedious process.
Firstly, you need to do thorough research to ensure you invest in profitable assets. Also, you might need to seek investment advice from a financial advisor - which can be costly.
Fine wine may be your best bet if you want the most hassle-free, recession proof investment!
But how do you invest in wine?
Wine Investment: The Easiest Way To Do It
Check out the Vinovest website if you want to explore fine wine investment. This site helps you buy, store, and sell investment-grade wines from France, New York, Las Vegas, and all over the world.
So, what are the benefits?
Vinovest stores your wines in bonded warehouses, and you don’t have to pay any VAT or excise duty for this. Also, it only charges you a 2.5% annual fee (1.9% for portfolios of $50,000+), which covers insurance, storage, fraud detection, and portfolio management.
But that’s not all. Visit the Vinovest website to learn more!
And if you need any wine investment advice, you can always reach out to a Vinovest expert.
Pick the Best Recession-Proof Investments for Your Portfolio
Investing during a recession can be a tough undertaking. However, you can usually tackle recessions and bear market problems by diversifying your investment portfolio.
For example, you could start investing in real estate, dividend stocks, gold, growth stocks, and penny stocks. However, don’t forget that fine wine tends to be a more profitable option than most stocks.
So, visit the Vinovest website to start your recession proof investment journey. This AI-powered platform helps you buy, store, and sell wines from all over the world - be it New York, Las Vegas, or Burgundy.
