Plunging stock prices can pose a challenge for even seasoned investors, but bear markets are also where you can find some of the best opportunities to load up on rock-solid, high-conviction stocks. It's hard to predict the timing of the next bear market, but it helps to stay prepared -- have some cash on you and have a list of stocks to buy handy. That's almost all you need to convert the next bear market challenge into an opportunity that could eventually help you build a fortune.
Here are three such stocks you'd want to add right away to your shopping list for the next bear market.
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A proven winner
If Visa (V 0.33%) crashes alongside the market, you might want to load up on this top fintech stock. Visa operates an asset-light business model -- it simply facilitates card-based transactions between consumers, merchants, and financial institutions and earns a fee on every transaction. Make no mistake: Those transactions and fees add up to billions of dollars every year. In 2021, Visa processed 164.7 billion transactions globally, generated revenue worth $24.1 billion, and earned $12.3 billion in net profit.
Visa's been growing this steadily for years, and not just one year. Take a look at this chart and the stunning growth in Visa's revenue, operating profit, and free cash flow in the past decade.
V Revenue (TTM) data by YCharts
This chart offers just one reason why Visa is the kind of stock you'd want to own even through bear markets. The company is also innovating to keep up with changing times -- it has partnered with multiple crypto platforms, invested in technologies like blockchain, and recently acquired the open banking platform Tink. It also offers several value-added services in analytics, data solutions, and risk and security management, among others.
Visa also pays a steady dividend and has, in fact, increased dividends every year since 2008, including a solid 17% hike in 2021. With travel opening up globally, cross-border volumes should rebound and further drive Visa's growth, making it a solid stock to buy if it dips in a market correction.
A money multiplier stock
Brookfield Infrastructure (BIP -0.47%) (BIPC 0.32%) has made patient investors filthy rich over the years, and much of this can be attributed to the company's solid dividend growth. The thing is, you can rely on Brookfield Infrastructure's dividends even in a bear market, and the stock will likely bounce back quickly if it falls given the company fundamentals. This is also one company that believes in seeking opportunities in a downturn.
Brookfield Infrastructure owns assets across utilities, energy, transportation, and data infrastructure. Most of these earn the company income under long-term contracts, which means Brookfield Infrastructure can generate steady cash flows even during tough times.
The company typically takes advantage of challenging times when companies are selling quality assets in distress, or simply offloading non-core assets to raise funds. For example, last year, Brookfield Infrastructure bought an energy infrastructure company and a utility, among others. So far, the company's investment strategy has worked in its favor, and it could grow its funds from operations per unit by a compound annual growth rate (CAGR) of 15% between 2009 and 2021. Brookfield Infrastructure's dividend grew at a CAGR of 10% over that period.
The backing of leading asset management group Brookfield Asset Management means Brookfield Infrastructure should never fall short of opportunities to grow. Brookfield Infrastructure is aiming for 5% to 9% annual growth in dividend in the long run and yields 3.3%, which again means steady dividends you can bank on even in the next bear market.
One of the biggest megatrends to invest in
The Russia-Ukraine conflict has affected several industries in multiple ways, but energy is perhaps one of the few sectors that could feel the long-term repercussions from this war.
Disruption in the supply of fossil fuels has sent prices of oil and gas to multi-year highs and compelled several nations to go back to the drawing board on their energy policies. Future energy security is now a priority, and that's also meant more attention than ever on the need to shift to clean energy.
As it is, the demand for renewable energy has risen rapidly in recent years. In the U.S. alone, solar and wind accounted for almost 80% of all electricity generation capacity additions in 2020, up from less than 30% in 2010. Natural gas made up the rest while coal was all but wiped out.
NextEra Energy (NEE 0.54%) could make the most of this global shift to renewable energy. NextEra owns one of the largest electric utilities in the U.S. and the world's largest wind and solar energy producing company. It's also tapping opportunities in another high-potential area -- green hydrogen.
NextEra's adjusted earnings per share (EPS) jumped 10% in 2021, and its renewables arm's contract backlog grew by nearly 25%. The company expects to grow adjusted EPS by compound annual rates of 6% to 8% through 2025 and increase dividends per share by almost 10% every year through 2022. Now that's some solid passive income you can rely on even in a bear market from a stock that should earn you solid returns in the long term.
