9 Recession-Proof Stocks

The stock market? Hurting. Home values? Plunging. Consumer confidence? At a 16-year low. Oil prices? You don't even want to know.

Clearly, the world is going to hell in a hand basket, right?

"You must chill"
As my pal Rich Smith is fond of saying. You're hurtin', and we hear ya. This past year has been a tough, tough year for small investors. I'd like to tell you there's a magic cure-all for market volatility -- but there isn't. If you bow out of the market now and move your money into bonds or cash, you're leaving long-run returns on the cutting board. If you get greedy and force the issue by chasing after searing-hot stocks such as First Solar (Nasdaq: FSLR  ) and Suntech Power (NYSE: STP  ) , you're likely to get burned.

So what is an investor to do?

Think big
And I don't mean that in some highfalutin philosophical sense or some business-school mumbo jumbo. I mean big brands. Big moats. Big dividends.

I'll be frank: Right now is a terrible time to let yourself get psyched out of the market, particularly out of high-quality businesses. Short-sighted, panicky investors are practically tripping all over themselves to sell shares of outstanding businesses: names like Paychex (Nasdaq: PAYX  ) , UPS (NYSE: UPS  ) , and American Express (NYSE: AXP  ) . They are selling. You should be buying.

Nine recession-proof stocks
Robust empirical research has shown that investing in large, slow-growing dividend payers is a market-beating strategy in the long run. So if you're able to invest in large caps that fit that bill and offer downside protection with their fat cash flows and brand prowess during times of recession -- names like Coca-Cola (NYSE: KO  ) and Procter & Gamble (NYSE: PG  ) -- well, why wouldn't you do that? As master investor Phillip Fisher once said, "Conservative investors sleep well."

So in the spirit of helping you down the road toward profits and peaceful sleep, we Fools are serving up nine of our current top defensive stock ideas, most of which sport rest-easy balance sheets and hearty-sized dividends. Then head on over to CAPS, and let us know which ones will outperform the market.

So relax, dig in, enjoy, and Fool on!

Our nine stalwart stocks:

Still hungry for more dividend goodness? The Fool's dividend-focused, market-beating Income Investor newsletter service offers up two fresh ideas a month. Try the service free for 30 days.

Joe Magyer does not own shares of any companies mentioned in this article. Coca-Cola and American Express are Inside Value recommendations. The Motley Fool owns shares of American Express. UPS is an Income Investor recommendation. Suntech Power is a Rule Breakers recommendation. The Motley Fool's disclosure policy wants fries with that shake.

Read/Post Comments (3) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 28, 2008, at 1:04 AM, Boo2007 wrote:

    Если кому то снится завтра всемирний потоп, то это для него, и он продаст свои акции за даром, а в бизнесе этого не может бить. Кто выиграет в терпении и скупке акций, тот завтра будет спокойно спать.

  • Report this Comment On July 03, 2008, at 12:40 PM, solomon wrote:

    The MF disclosure policy needs to stick with a salad and water. You forgot that JNJ is also a Income Investor pick. There might be another one or two picks you missed. Want to "value size" that disclosure policy?

  • Report this Comment On July 07, 2008, at 8:24 PM, kabrink wrote:

    I would add Waste Mgmt WMI to this list.

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