It's a scary feeling to witness share prices crashing. This year has been turbulent as the technology-heavy Nasdaq Composite Index and bellwether S&P 500 Index both enter a bear market. Such declines highlight the importance of fortifying your investment portfolio with dependable stocks that will allow you a good night's sleep.
Such stocks have characteristics that enable them to remain resilient when confronted with the highest inflation in four decades along with the specter of a recession. Important attributes include a strong and recognizable brand name that boasts a large group of loyal customers, a track record of growing dividends, and a history of surviving through challenging conditions. These traits ensure that these stocks qualify as safe bets even when the market dives.
Here are three such stocks that you can consider for your investment portfolio.
Image source: Getty images.
McDonald's
McDonald's (MCD -1.01%) is probably one of the most recognizable fast-food chains in the world, with almost 40,000 stores in more than 100 countries. Apart from serving its well known burgers and fries, the company has also doled out consistent and rising dividends.
Just this month, McDonald's raised its quarterly dividend by 10% year over year to $1.52 per share, posting an impressive 46 consecutive years the company increased its payout. These dividend increases are a great way for an income-seeking investor to combat inflation as McDonald's continues its great track record of returning capital to its shareholders.
The fast-food giant has also been a bastion of strength throughout the pandemic. Total revenue jumped 21% year over year in 2021 to $23.2 billion. Operating and net income both surged by 41% and 59% year over year, respectively, with global comparable sales growth of 17% with all its markets seeing growth. Although the second quarter of 2022 saw revenue dip slightly by 3% year over year, diluted earnings per share still rose 8% year over year after stripping out the effects of one-off items.
These numbers are ample proof that the McDonald's franchise and its legion of loyal customers are helping buoy sales and ensure the company can continue to dish out healthy dividends.
PepsiCo
From fast food, we move on to the food-and-beverage giant PepsiCo (PEP -0.60%). The company's wide range of snacks and beverages across brands such as Pepsi-Cola, Lay's, Gatorade, and Quaker Oats are enjoyed by consumers in more than 200 countries.
The company reported sturdy growth even through the pandemic as demand remains high for its products. For 2021, revenue rose 12.9% year over year to $79.4 billion while operating income increased 10.7% year over year to $11.2 billion. Net income edged up 7% year over year to $7.6 billion and PepsiCo also generated healthy free cash flow of $7 billion and $6.4 billion in 2021 and 2020, respectively.
The momentum carried over into the first nine months of 2022, with revenue increasing 7.7% year over year to $58.4 billion. Operating and net income rose 4.4% and 6% year over year to $9 billion and $6.7 billion, respectively, after adjusting for an exceptional gain and impairment loss in the nine-month period.
PepsiCo's free cash flow generation remains robust with $3.7 billion churned out during the first three quarters of 2022.
The company's famous brand names and resilient food-and-drink business enabled it to increase its quarterly dividend by 7% year over year to $1.15 per share. This increase marks the 50th consecutive year that PepsiCo raised its dividends, and it is now officially on the Dividend King list.
Kimberly Clark
Kimberly Clark (KMB -0.37%) is a consumer goods behemoth that sells a variety of adult, feminine, and baby-care products to more than 175 countries. The company has seen a steady increase in revenue from $18.4 billion in 2019 to $19.4 billion, demonstrating consistent demand for its famous brands such as Huggies diapers, Scott tissue paper, and Cottonelle kitchen napkins.
Although net income dipped from $2.1 billion to $1.8 billion during this period, Kimberly Clark continued to post healthy free cash flow during the three years. This consistent free cash flow enabled the company to raise its dividend without fail for five decades, with its latest quarterly dividend coming in at $1.16 per share.
Things are looking up for the company after the second quarter of 2022, with net sales rising by 7% year over year to $5.1 billion. Operating profit inched up 1% year over year while net income rose 8% year over year to $437 million.
The important metric to look at, free cash flow, continues to be positive for the first six months of this year, affirming Kimberly Clark's ability to keep paying increasing dividends to investors.
The combination of rising dividends and strong brands should help the company sail through any trouble and emerge stronger.
