To say that there's economic anxiety surrounding 2023 would be an understatement. In 2022 there was inflation not seen in 40 years, and a bear market that brought a humbling experience to many investors who had enjoyed the fruits of the past bull run. Unfortunately, many experts believe we're just getting started, and things could get worse before they get better.
Regardless of what happens in 2023, it's always better to be overprepared than underprepared. Here are three stocks that are safer bets than most in the event of a market crash.
AT&T
After losing almost a quarter of its value from January through mid-October of this year, AT&T (T 0.39%) has rallied, and is now up just below 1% year to date. For the most part, investors don't expect outsized returns from AT&T's stock price; it's largely about the dividends. Unfortunately, AT&T cut its yearly dividend by nearly half when it spun off its WarnerMedia media unit, but its dividend is still generous at $1.12 per share.
NYSE: T
Key Data Points
AT&T's trailing 12-month dividend yield -- the average yield over the past year -- is just above 7%, which should give investors confidence that they'll be rewarded regardless of how the stock price performs. More importantly, though, is how the commitment to reinvesting more cash back into the business is playing out for AT&T. In Q3, its revenue increased 3.1% year over year, and it added around 708,000 new postpaid phone customers.
Telecommunication services are an essential part of American life. From phone to internet service, both consumers and businesses rely on telecommunication companies for vital services, making the industry more recession-resistant than others. AT&T's refocus on its core business and steadily growing customer base put it in a great position to weather a market crash and return value to its investors.
Procter & Gamble
When the economy is less than ideal and the stock market is in a down period, investors generally turn to defensive stocks. To qualify as a defensive stock, a company must check these three boxes: consistent and stable earnings, healthy balance sheets, and products that sell no matter what. Procter & Gamble (PG 1.02%) (or P&G) has all three, making it a less risky bet if the market crashes.
NYSE: PG
Key Data Points
Here are some of P&G's notable brands in different areas:
- Baby care: Luvs, Pampers
- Fabric care: Bounce, Gain, Tide
- Family care: Bounty, Charmin, Puffs
- Feminine care: Always, Tampax
- Grooming: Braun, Gillette, Venus
- Hair care: Head & Shoulders, Old Spice, Pantene
- Home care: Cascade, Febreze, Swiffer
- Oral care: Crest, Oral-B, Scope
- Personal healthcare: Pepto-Bismol, Vicks, ZzzQuil
Products are generally categorized as either consumer staples or consumer discretionary. Consumer staples are essential items, and consumer discretionary are seen as "wants" instead of "needs." Luckily, P&G's products fall into the consumer staples category.
When money is tight, it's easy to go without upgrading electronics, high-end clothes, and home improvement projects. It's much harder (and generally not recommended) to forego baby care, feminine care, grooming, oral care, and such. P&G is as recession-resistant as they come.
Walmart
No company in the world brings in more revenue than Walmart (WMT 1.80%). In its 2022 Q3, the company brought in over $152.8 billion in revenue (up over 8.3% year over year), and sales in the U.S. were up 8.2%. For perspective, that's more than the annual revenue of Nike (NKE 3.14%), IBM (IBM 2.71%), and American Express (AXP 1.26%) -- combined. There are cash cows, and then there's Walmart.
NASDAQ: WMT
Key Data Points
What makes Walmart a smart choice for investors is its positioning as a one-stop-shop for value for consumers. As we near 2023 and a looming recession drives economic anxiety, people will undoubtedly go to where the value is. And it's not just lower-income consumers either: Walmart has said that it's seen more higher earners gravitating toward its products (especially groceries), and there's no reason to believe this will slow down anytime soon.
Walmart's balance sheet and competitive advantage are built to withstand various broader economic conditions. Add in the fact that it's increased its yearly dividend every year since it started paying them in 1974, and investors can comfortably seek shelter with the retail giant if the market crashes.
