It's hard to find any stocks right now that have generated positive returns, particularly among those that aren't riding the tailwind of a cyclical sector that is performing well in this market environment. But there are a few stocks out there that have not only navigated this market well, but have managed to thrive no matter what the market is doing.
Here are three all-weather stocks that could not only boost your portfolio now, but over time as well.
1. Coca-Cola
Coca-Cola Co. (KO -0.23%) has been a model of consistency over the years. Testament to that is the fact that the beverage company's stock has only had one negative year since 2008 (when looking at total returns), and the negative year barely qualifies, as its negative 0.34% total return in 2016 rounds up to flat. Even this year, Coca-Cola has managed to outperform, as it is essentially flat year to date, with the stock trading at about $59 per share.
Coca-Cola has not been devoured by the bear market, as revenue was up 16% year over year to $10.5 billion in the first quarter and earnings per share increased 23% to $0.64 year over year. Furthermore, it's been very efficient, with its operating margin jumping to 32.5%, up from 30.2% in the first quarter of 2021. Coca-Cola has been able to navigate this inflationary environment because of its iconic brand, market leadership, and pricing power. These factors have allowed it to increase prices without hurting sales. In the first quarter, 7% of its revenue increase came from changes in prices, while 11% came from concentrate sales.
The other benefit of Coca-Cola, particularly in this market, is its dividend. Coca-Cola is a Dividend King, meaning it has increased its dividend every year for more than 50 years -- 59 years, to be exact. It currently pays out a quarterly dividend of $0.44 per share at a yield of 2.87%.
2. Berkshire Hathaway
Berkshire Hathaway (BRK.A -0.24%) (BRK.B -0.32%) is another iconic brand, run by Chairman and CEO Warren Buffett, that has been remarkably consistent. The company's stock price has returned an average of 13.2% annualized over the past 10 years (as of June 13), while the S&P 500 has returned about 11% per year over that same period. Berkshire Hathaway stock is down about 6% year to date compared to the S&P 500, which is down about 22% year to date.
Berkshire Hathaway's performance is tied to its CEO, who is considered one of the best investors of all time, as well as its business model and strategy. It is a holdings company with two major arms to its business. It has a stock portfolio worth roughly $300 billion. This includes positions in almost 50 public companies, including Coca-Cola, which is one of its five largest holdings. Other top holdings include Apple, Bank of America, and American Express. Berkshire Hathaway also outright owns a portfolio of companies, including GEICO, Duracell, Dairy Queen, Benjamin Moore, and Fruit of the Loom, to name a few.
Buffett and his team are focused on investing in stocks and businesses that are priced below their intrinsic value. He also looks for companies with strong competitive advantages, among other criteria. While Berkshire Hathaway may not put up the huge gains that some of the technology companies experienced during the bull markets, the company tends to outperform when markets are down and value is in favor. Plus, it's sitting on more than $100 billion in cash, so it is well-capitalized to navigate the downturns and deploy that cash toward its future growth.
3. Mastercard
Mastercard (MA -0.06%) is the second-largest credit processor and, along with Visa (V 0.15%), forms a duopoly in the space. This gives Mastercard (and Visa, for that matter) a huge competitive advantage based on a massive network through which payments flow. Mastercard also has the advantage of its business model, as it makes money on fees assessed every time someone makes or processes a payment on its network. As such, Mastercard has little overhead and no credit risk tied to making loans, and generates huge margins.
Mastercard has posted an average annual return of 23% over the past 10 years as of June 13, and while its stock price is down 10% in 2022, that's more reflective of the overall growth stock sell-off than it is of Mastercardʻs performance. In this first quarter, marred by high inflation, Russiaʻs invasion of Ukraine, and an economic slowdown, Mastercard saw revenue increase 24% year over year to $5.2 billion and net income jump 44% to $2.6 billion.
As mentioned, Mastercard has huge margins, with an operating margin of 55% and a profit margin of 47%. In addition, it is extremely efficient, with an off-the-charts return on equity of 139%. As we have seen this year, its duopoly allows it to perform well even when markets are down, and its growth should take off when markets recover.
Like Coca-Cola and Berkshire Hathaway, Mastercard has unique advantages that make it a stock for all seasons.
