Standard and Poor's research shows that consumer staples, utilities, health care, and financials outperform the market 80%-90% of the time during recessions. As my Foolish colleagues Tim Hanson and Brian Richards point out, this outperformance is due to their reliability and healthy dividend policies.
Among large caps, this strategy held up extremely well during the last recession: Most of the top performers -- a group including UnitedHealth Group (NYSE:UNH) and Procter & Gamble (NYSE:PG) -- were defensive dividend payers.
With that in mind, I used our new CAPS screening tool to discover which defensive stocks our 115,000-member CAPS investment community loves most.
These stocks have:
- Market capitalizations greater than $10 billion.
- Dividend yields greater than 1%.
- Debt-to-equity ratios below 40%.
- Four- or five-star ratings from our CAPS community.
Remember, since we began tracking the eerily prescient collective intelligence of our CAPS investment community in November 2006, four- and five-star companies have outperformed the market by more than 7% and 12%, respectively.
|
Company |
Share Price |
Sector |
Market Cap
|
Dividend Yield |
|---|---|---|---|---|
|
ConocoPhillips (NYSE:COP) |
$79.25 |
Energy |
$120.5 |
2.4% |
|
Disney (NYSE:DIS) |
$31.75 |
Services |
$59.1 |
1.1% |
|
Nucor (NYSE:NUE) |
$50.83 |
Basic Materials |
$16.5 |
2.6% |
|
NYSE Euronext (NYSE:NYX) |
$39.37 |
Financial |
$10.4 |
2.9% |
|
PepsiCo (NYSE:PEP) |
$70.1 |
Consumer Goods |
$109.2 |
2.4% |
Data from Motley Fool CAPS and Yahoo! Finance as of Aug. 19.
Of course, screens are merely a first step in the stock-selection process. As Miguel de Cervantes -- whose overly idealistic Don Quixote flails impulsively after unachievable dreams -- reminds us, "Diligence is the mother of good fortune." Come and join us on Motley Fool CAPS to dig into these companies further. Let our 115,000-strong (and counting) CAPS community help you polish your portfolio.
