We Fools believe that investors should favor businesses that can crank out profits in good times and bad. But which companies, in particular, are capable of such a feat? We asked a team of investors to weigh in, and they picked PepsiCo (NYSE:PEP)Brookfield Renewable Partners (NYSE:BEP), and Tanger Factory Outlets (NYSE:SKT).

Bear and bull standing near a growing stack of coins

Image source: Getty Images.

A solid dividend in good times and bad

John Rosevear (PepsiCo): I've always liked PepsiCo for investors seeking a stock for all seasons. It's easy to dismiss the company as a seller of sugar water, but I think of it a bit differently: It's a distribution company that has lots of compelling products to put on its trucks, with new products added all the time. 

Remember that PepsiCo's products include over 20 brands beyond its carbonated-beverage Pepsi range, including juices and energy drinks and the huge-selling Frito-Lay and Quaker Oats brand families. Now think about all the places you see those products: corner stores, cafeterias, take-out restaurants, and many others, not just in the U.S. but all over the world. How did they get there? 

They got there via PepsiCo's tremendous distribution network. PepsiCo has the ability to get new snack and beverage products in front of a whole lot of people in a whole lot of places fairly quickly. And while recessions hurt sales of just about everything, people who like chips and soda -- or orange juice and Gatorade -- don't usually stop buying those things when times are tight. 

CEO Indra Nooyi has kept PepsiCo innovating, moving it into new product lines for fat- and calorie-conscious buyers. She has also kept the company's long track record of dividend growth going -- and absent a crisis, that's likely to continue. 

The upshot: A well-run business that offers growth in good times, pays a solid 2.9% dividend, and should be steadier than most in a downturn.

An energy yield for any market

Travis Hoium (Brookfield Renewable Partners): There aren't a lot of companies that will operate in the same way whether we're in a bull or bear market. But yieldcos that own renewable-energy projects with long-term contracts to sell energy to utilities aren't going to change their strategies if the market takes a turn for the worse. One of the most stable yieldcos on the market is Brookfield Renewable Partners. 

The company owns primarily hydroelectric power assets around the world, although it's adding wind farms to the portfolio, as well. The company aims to deliver 12% to 15% annualized total returns, which includes a dividend increase of 5% to 9% from organic cash flow growth and new projects. That's growth on top of a current dividend yield of 5.4%.

What makes Brookfield Renewable Partners unique is that it aims to grow organically instead of using its shares to buy new projects. Most yieldcos aim to grow by acquiring projects using cash from issuing debt and equity to investors. If the combined cost of capital is low enough, a company can grow indefinitely. But if a dividend yield gets too high, the yieldco can collapse, which we saw last year with SunEdison and TerraForm Power. Brookfield Renewable Partners' approach is much more conservative, and it will generate strong returns for investors whether we're in a bull or bear market a year from now. 

A retail REIT with staying power

Brian Feroldi (Tanger Factory Outlets): You might roll your eyes when I suggest that a retail-focused REIT can thrive in both good and bad times. However, Tanger Factory Outlets isn't just any old retail REIT. The company owns 43 outlet centers that are spread strategically across North America.

These centers attract consumers by offering big discounts on name-brand merchandise. Given the huge discounts, consumers tend to shop there in good times and in bad.

As CEO Steven Tanger likes to say: "In good times, people like a bargain, and in tough times, people need a bargain."

For proof that CEO Tanger isn't full of hot air, consider these facts:

  • Same-center net operating income growth has remained positive for more than a decade, including throughout the entirety of the 2008/2009 financial crisis.
  • Occupancy rates have remained above 95% for more than 24 straight years.
  • Tanger has increased its annual dividend payment every year since going public in 1993.

Despite Tanger's remarkable consistency and value proposition for consumers, Wall Street has thrashed the company's stock so badly over the last year that shares currently yield 6%. I think that represents a bargain for income-seeking investors.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends PepsiCo and Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.