Take your pick of words that are scaring markets: Greece, Italy, Spain, Syriza, New Democracy, (no) QE3, Facebook, China. With fear meters buzzing, converting to cash seems like a good plan, but you may also be scared of having inflation eat away at your savings. Where to invest at a time like this? Let's look at some stocks that performed admirably in the last financial crisis, pay out a good dividend, and have positive future prospects.
A fear-proof portfolio
One thing you'll notice about this batch of companies is that they all provide food -- something that's needed no matter what governments, currency unions, central banks, or business cycles do. Whether you'll be sailing on your yacht enjoying the spoils of a new business deal and eating caviar, or hunkering down in your bunker eating soup and waiting until the zombies pass by, either way you'll still be eating. And as such, this set of stocks performed relatively admirably in the last recession:
From the high of the S&P 500 in October 2007 to its low in March 2009, the index lost more than half of its value. On the other hand, the worst loss among this basket of stocks was half that. Let's review each pick.
Heart healthy, portfolio healthy
Brand value? General Mills
General Mills continues to look abroad, hoping to add to the 20% of sales that come from outside the U.S. with a newly acquired Brazilian food maker. The company pays a dividend yielding 3.2%, and with a payout ratio of 51%, that dividend is easily sustainable.
Andy Warhol, CFA
And for dessert
Any kid in America will tell you where to put your money: in candy! Hershey
Preserving your capital
If a stock drops by 50%, it must gain 100%, not 50%, to come back to equal value. This makes defensive stocks like these food juggernauts attractive. Add in their dividends that are far away from any danger, and they become even more appealing.
Of course, you may not get multibagger gains with these defensive stocks, but you can rest easy knowing that if tomorrow brings zombies or some new currency backed by petrified wood, people will still need a lunch.
If you're looking for more quality companies, read our free report on "3 Stocks That Will Help You Retire Rich". This report gives you the habits you need to build long-term wealth, along with three stocks that can help you along your way -- and best of all, it's free.
Fool contributor and Michigander Dan Newman also has to mention Kellogg for being a Michigan company. He holds no position in any of the above companies. Follow him on Twitter, @TMFHelloNewman.
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