A recession in the United States will likely occur within the next one-and-a-half years, according to the latest survey of U.S. business economists by the National Association for Business Economics. Economists peg the probability of a recession starting by mid-2021 at 66%. Moreover, nearly half of them -- 43% -- believe that such an economic downturn will begin this year.

If you believe that a recession is on the relatively near-term horizon, you might consider buying shares now of companies whose sales should hold up relatively well during economic slumps. Five stocks worth considering are water utility leader American Water Works (NYSE:AWK), electric utility behemoth NextEra Energy (NYSE:NEE), chocolate-making giant Hershey (NYSE:HSY), nut company John B. Sanfilippo (NASDAQ:JBSS), and cannabis-focused real estate investment trust Innovative Industrial Properties (NYSE:IIPR).

Notably, all of these stocks have significantly outperformed the broader market over the long term. All are attractive for the long run, rather than just being "recession-resistant stocks."

The word recession in red capital letters.

Image source: Getty Images.

Recession-resistant stocks overview


Market Cap

Dividend Yield

Wall Street's Projected Average Annual EPS Growth Over Next 5 Years

1-Year/10-Year Stock Returns

Stock Return During Great Recession* 

American Water Works

$21.9 billion 1.7% 8.2% 38.3%/596% (12.7%)**

NextEra Energy

$118 billion 2.1% 8% 45.3%/526% (15.7%)


$22 billion

2.2% 8% 39.8%/416% (7.2%)

John B. Sanfilippo

$1 billion 2.9%*** N/A  70.4%/758% (21.2%)

Innovative Industrial Properties

$890 million 5.3% N/A (124% current year, 141% next year)  71.4%/N/A N/A 

S&P 500

 --- 1.8% -- 34.8%/257% (35.6%)

Data sources: Yahoo! Finance and YCharts. Data as of Jan. 3, 2020. EPS = earnings per share. *Great Recession technically lasted from December 2007 to June 2009. **Began trading in April 2008; it lost 12.6% of its value during the portion of the recession during which it traded. ***Comprised of a regular dividend of $0.60 and a special dividend of $2.00. 

2 top utility stocks

Along with food, basic utilities tend to be the last things that consumers are prone to cut back on during difficult economic times. Of all utility types, water utilities are generally the most stable, which makes sense as fresh water is essential to life. 

Ok, you're sold on a water utility, but why American Water? It's the best in class largely because it's the largest and most geographically diverse publicly traded U.S. water utility. These traits give it an advantage in acquisitions, which is no small thing in an industry that's quite fragmented and rapidly consolidating. 

While not quite as hardy as their water cousins, electric utilities are also good choices to weather recessions. NextEra Energy is a top pick in this industry. It owns two electric companies in Florida -- a state whose population should continue to steadily grow -- that together serve more than 5.5 million customers. In addition, NextEra is a great play on the growth of renewable energy. It's the world's largest generator of renewable energy from the wind and sun.  

Pile of various types of shelled nuts.

2 leading snack food stocks

During good and bad times, people need to eat if they want to stay alive. Some studies have even shown that consumers tend to gobble up more snack foods during challenging economic times. The theory -- which is called the Lipstick Effect -- goes that they "treat" themselves to small, affordable indulgences to compensate for cutting back on bigger-ticket items.

Two top stocks that fall into this category are Hershey and John B. Sanfilippo, or JBSS. Hershey's flagship Hershey Milk Chocolate Bars, Hershey Kisses, Reese's Peanut Butter Cups, and other products are popular around the globe. While consumers in developed countries have generally been shifting toward more healthy eating options, premium chocolates -- notably, dark and organic chocolates -- have been gaining in popularity. The company's fortunes have benefited from its increased focus on the premium space. It entered the organic chocolate market in 2006 via its purchase of Dagoba. 

JBSS is the leading processor and distributor of snack and recipe nut and dried fruit products in the U.S. Its brands include Fisher, Orchard Valley Harvest, Squirrel Brand, and Southern Style Nuts brands. Nut consumption has been rising in the U.S. in recent years, so the company is in an attractive business. Two big things to like about JBSS is that it's still run by the Sanfilippo family, who have a sizable ownership stake; and it's paid a beefy special annual dividend for at least the last eight years, along with a regular dividend for the last three years.

A cannabis stock that pays a fat dividend

The legal marijuana market should continue to grow in the U.S. and globally for some time regardless of the economic climate. Granted, it's possible a deep recession might slow the growth rate, but the legalization movement seems unstoppable. 

One of the least risky ways to get exposure to the cannabis (a term that includes marijuana and hemp) space is to invest in Innovative Industrial Properties. IIP is unique in several ways: It's the only publicly traded real estate investment trust (REIT) focused on the cannabis sector, it's the only pure-play cannabis stock that pays a dividend, and it's one of the rare cannabis companies that's profitable.

The fast-growing company buys properties in U.S. states where medical marijuana is legal and leases them to state-licensed operators using long-term, triple-net leases. It owned 41 fully leased properties located in 13 states, as of Nov. 6. IIP fills a big need among marijuana growers and processors. These companies have a difficult time obtaining financing from traditional sources because marijuana is not legal on the federal level in the U.S.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.