With volatility increasing in the stock market over the last few weeks, many investors are concerned that Wall Street might be heading for a correction or crash. And if a major bear market is about to ensue, this could be a good moment to add some resilient and recession-proof stocks to your portfolio for security and peace of mind.
Two that really fit that mold are Johnson & Johnson (JNJ -0.69%) and Pfizer (PFE -0.19%). Both businesses have been bringing in record profits and increasing their dividends, and investors can expect their stocks to be wealth-generators over the long run.
Image source: Getty Images.
The case for Johnson & Johnson
Johnson & Johnson is the world's largest pharmaceutical company by market cap, weighing in at just under $450 billion. It's also a stock that investors run to for safety during times of instability. One reason for that is its status as a Dividend King -- a title it's earned by increasing its payout annually for over 50 years. Indeed, the company's dividend-hiking streak has reached 58 straight years, and there are no signs that it's going to end.
When Johnson & Johnson reported first-quarter earnings on April 20, it outperformed analysts' expectations, posting $2.59 in adjusted EPS and revenues of $22.32 billion, versus consensus estimates of only $2.34 in adjusted EPS and $21.98 billion in revenue. Even with the U.S. economy still in a less-than-optimal condition, the company grew sales in Q1 by 7.9% year over year.
Additionally, all of the company's core business lines expanded their earnings. Its Janssen pharmaceutical business, which developed the company's COVID-19 vaccine, grew sales by 9.6% year over year to $12.19 billion. Its medical devices business generated sales of $6.57 billion, up 7.9%.
That earnings growth was robust enough that management raised its financial guidance for 2021. It now forecasts profits of $9.42 a share, up from $9.40, and revenues of $90.6 billion, up from $90.5 billion.
The case for Pfizer
Pfizer stock has jumped by over 15% in the last three months. Those gains were partly driven by the immense success of the COVID-19 vaccine it developed in partnership with BioNTech SE. In just the first quarter, Pfizer has brought in $3.46 billion in revenue from the vaccine. Pfizer is expecting approximately $26 billion in revenue from the jab in 2021 alone, and hopes to expand its vaccine production capacity from 2.5 billion doses this year to about 3 billion in 2022.
For that quarter, the 150-year-old pharmaceutical company grew its revenue by 42% year over year. Even without including the impact of the coronavirus vaccine, sales still jumped 8% year over year, led by Eliquis (an anticoagulant) with $1.6 billion in sales and Xeljanz (for rheumatoid arthritis and psoriatic arthritis) with $538 million. These drugs saw their sales for quarter jump 25% and 18% year over year, respectively.
Pfizer also raised its quarterly dividend by 3% to $0.39. During a period when many companies have had to cut or suspend their payments to shareholders, Pfizer rewarded shareholders with a payout increase. Before 2010, when it last cut its payout, Pfizer was a Dividend Aristocrat, having increased its payout annually for more than 25 years. In the years since then, it has returned to its payout-growing ways with annual hikes, so over time, it could very well reach Dividend Aristocrat status once again. At current share prices, Pfizer's dividend yields about 3.9% -- almost triple the 1.34% yield now being paid by the SPDR S&P 500 ETF.
This healthcare giant's growing business and its attractive dividend are enough to keep me wanting Pfizer in my portfolio, especially when a market downturn might be looming.
