Following the recent federal funds rate cut, investors are closely monitoring recession indicators. A struggling housing market, concerning labor market signals, and various economic metrics suggest a potential recession on the horizon. This comes even as many stocks continue to rise. For cautious investors, it may be wise to consider adopting a more defensive position in their equity investments, especially if they foresee a recession in the upcoming quarters.
Fortunately, there are a number of strategies to prepare. In this article, we will explore one company each from the recession-resistant consumer staples and utilities sector, along with a third from the healthcare space. These firms may offer stability even if the broader market experiences turbulence.
Essential Consumer Goods Stock With Reliable Dividends
Church & Dwight Co. Inc. (NYSE: CHD) is renowned for its diverse range of household and personal care products, including brands like Arm & Hammer, Oxyclean, and Trojan. These items are often viewed as essential regardless of economic conditions, which may help shield Church & Dwight from a potential recession. The company’s ongoing expansion, both through research and development and strategic acquisitions—such as its recent purchase of hand sanitizer maker Touchland—positions it well for continued sales performance, even if significant growth is not expected at this time.
Investors should view CHD shares not as a growth opportunity but as a potential source of stability during volatile periods. The company boasts a long dividend history, with nearly three decades of consistent increases, a compelling yield of 1.30%, and a conservative payout ratio of 55.66%.
Despite a year-to-date decline of over 10%, largely due to tariff impacts, analysts anticipate a recovery, predicting upside potential of more than 14%.
Fast-Growing Utility Stock With Big Expansion Plans and Rock-Solid Dividends
Spire Inc. (NYSE: SR) is a regional natural gas utility serving customers in Mississippi, Alabama, and Missouri. The company is expanding through the acquisition of Piedmont Natural Gas in Tennessee, which will add over 200,000 new customers. This acquisition not only has immediate benefits but is also strategically sound—Nashville, served by Piedmont, is experiencing rapid population and data center growth, likely contributing to a projected bottom-line increase of around 8% in the coming year, according to analysts.
For utility firms like Spire, stability can be threatened by the need for costly operations and maintenance. Fortunately, Spire has managed to keep these costs low, growing by less than 1% year-to-date (YTD) as per the latest earnings report. Like Church & Dwight, Spire also represents a strong dividend play, with a yield of 4.12% and a healthy payout ratio of 67.12%, backed by 22 years of consecutive distribution increases.
Undervalued Dual-Sector Stock With Recession-Resistant Services and Long-Term Upside
Chemed Corp. (NYSE: CHE) operates at the intersection of home services and healthcare through its two primary brands, Roto-Rooter and Vitas Healthcare. Both segments provide services likely to remain robust during a recession—Roto-Rooter offers plumbing, water restoration, and drain cleaning services, while Vitas focuses on end-of-life healthcare. Although legislative changes in Medicare could impact Chemed’s business, the long-term strength of its operations remains stable.
Looking ahead, Chemed will need to navigate challenges such as hospice care caps, labor concerns, and rising insurance costs to sustain growth. The company’s recent performance fell short of analyst expectations, leading to downward pressure on CHE shares, which are now trading at their lowest P/E level in over four years. This situation presents a potential buy opportunity for a company with long-term resilience and the capacity to thrive during broader economic challenges.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
