Certain stocks tend to perform better in a bull market, while others show their strengths in bear times. If you add both of these types of stocks to your portfolio, you're likely to benefit over the long haul. But there's another type of stock you'll want to own too. And this is the sort of company that might excel no matter what the market is doing.
These stocks have strong brands and a solid portfolio of products that have performed in the past -- and are likely to continue performing. They also may pay a dividend, offering you income just for owning them. These are no-brainer stocks to buy during any market conditions.
Three great examples are healthcare companies Abbott Laboratories (ABT 0.63%) and Johnson & Johnson (JNJ -0.46%) and beverage powerhouse Coca-Cola (KO). Let's take a closer look at each.
1. Abbott Laboratories
Abbott Labs' performance shone during the worst of the pandemic thanks to its coronavirus tests. They brought in billions of dollars for the healthcare company.
That revenue source is slipping as we head toward a post-pandemic world, but there's no need to worry. That's because Abbott doesn't rely on just one business. Instead, it owns four: diagnostics, medical devices, nutrition, and established pharmaceuticals. In the most recent quarter, COVID tests weighed on diagnostics, but the other three all posted growth.
Key financial metrics like return on invested capital and free cash flow have generally climbed in recent years at Abbott. And, even if we see a dip today as COVID test sales fall, the company should continue to grow thanks to other major products like its leading continuous glucose monitoring system, FreeStyle Libre, and newly approved products.
ABT Return on Invested Capital data by YCharts
Let's not forget the dividend. As a Dividend King, Abbott has increased its payments for more than 50 years. This track record, along with the company's strong free cash flow, suggest dividend growth will continue.
2. Johnson & Johnson
Speaking of Dividend Kings, J&J also falls into this category. The big pharma company pays a dividend of $4.76 per share, representing a dividend yield of 3%, well above the S&P 500 index's yield of 1.5%. Like Abbott, J&J has the free cash flow to support ongoing dividend growth (even if free cash flow has declined from its peak).
JNJ Free Cash Flow data by YCharts
You'll also like J&J for its portfolio of pharmaceutical and medtech products -- ones patients need regardless of the economic situation. That means J&J could post rising earnings during any market environment.
And right now, the company may be heading for a new chapter in its growth story. J&J recently spun off its consumer health business to devote all its resources to the stronger growth areas of pharmaceuticals and medtech.
The company also is on the lookout for acquisitions and business deals that could add to growth down the road. Most recently, it bought heart pump maker Abiomed, adding a 12th billion-dollar medtech platform to its portfolio. And J&J is on target to report $57 billion in pharmaceuticals revenue by 2025, nearly a 10% increase from last year.
3. Coca-Cola
Coca-Cola's brand strength has helped it succeed in any economic environment. Even as consumers saw their buying power decline in recent times, they still stuck with the company's much-loved beverages.
In the most recent quarter, Coca-Cola reported an increase in net revenue and earnings per share. And Coca-Cola continued to gain market share in total nonalcoholic ready-to-drink beverages. The company also has generally increased earnings in recent years.
The world's biggest nonalcoholic drink maker sells its products in more than 200 countries, and beyond its eponymous beverage, is known for other big brands like Minute Maid juices and Dasani water. To maintain its strength, Coca-Cola has taken established brands like Minute Maid and added new and innovative products to appeal to today's customers.
Finally, dividend payments are another reason to love Coca-Cola. Like the other companies mentioned, it's a Dividend King. And like Abbott and J&J, Coca-Cola also has the free cash flow -- at more than $9 billion -- to sustain dividend growth.
All of this means Coca-Cola has what it takes to lift your portfolio over time, no matter what the market is doing.
