There’s a lot to be worried about with the stock market right now. Sticky inflation has kicked the timing of interest rate cuts down the road to this fall, the military conflict in the Middle East is escalating, bond yields are marching higher, and corporate earnings for this year’s first quarter are, so far, mixed at best. The end result is that the benchmark S&P 500 index is down 3% so far in April after rising 10% in this year’s first quarter. Where do we go from here? It’s difficult to say.
The market outlook has certainly gotten more complicated in recent weeks. As such, many professional traders and hedge fund managers are getting defensive and preparing their portfolios for a potential market crash. News reports state that hedge funds are shedding growth stocks at the fastest pace in months and are allocating capital to more defensive names. Given the rising uncertainty, retail investors might want to do the same. Here is market meltdown? Three crash-proof stocks to consider.
Berkshire Hathaway (BRK-A/BRK-B)
Berkshire Hathaway (NYSE:BRK-A/NYSE:BRK-B) is about as safe a harbor as investors are going to find in a market storm. The company is largely a crash-proof stock due to its highly diversified business interests, which range from railroads and fast-food restaurants to insurers and furniture retailers, a cash pile that at last count stood at $167.60 billion, and a massive portfolio of stocks that currently stands at just under $370 billion. Berkshire’s own Class B stock has risen 24% in the last 12 months.
Berkshire Hathaway’s stock is always appealing is that the company buys back its own stock every chance it gets. Most recently, Berkshire bought back $2.3 billion of its own stock in this year’s first quarter through March 6. The company, led by Warren Buffett, planned to repurchase $3 billion of its own stock in Q1 this year. The stock buybacks usually indicate that Buffett views the stock as cheaply valued.
Coca-Cola (KO)
One of Buffett’s favorite stocks is Coca-Cola (NYSE:KO). Many of the characteristics that Buffett likes about Coke are what makes it a crash-proof stock to own. These include steady and reliable earnings, consistent dividend increases, and a share price that stays steady despite market fluctuations. This year, KO stock is down 2%. Over the last five years, the share price is up 20%. The limited movement of Coca-Cola’s stock has led some analysts to compare it to a bond.
What is nice about Coca-Cola is its consistent earnings and dividend increases. In February of this year, Coca-Cola raised its quarterly dividend to shareholders by 5.4%, taking the payment to 48.5 cents per share from 46 cents previously. The dividend yield on Coca-Cola’s stock is now 3.33%. This marks 62 consecutive years that Coke has increased its dividend, making it one of a select group of companies that have boosted their payouts to stockholders for 50 years or more, known as “dividend kings.”
Walmart (WMT)
For a stalwart blue-chip stock that is impervious to market crashes, look to discount retailer Walmart (NYSE:WMT). Owing to its low prices and the fact that it is the biggest grocery store chain in America, Walmart’s sales are largely immune to economic ups and downs. In fact, consumers seem to shop at Walmart more the worse the economy gets. It helps Walmart post consistently strong financial results, and that its share price grows at a slow and steady rate.
Year to date, WMT stock is up 13%. Over the last five years, the share price has increased 78%. The stock just got more affordable to buy after Walmart executed a three-for-one stock split in February. The stock split announcement was made as the company’s shares were trading near an all-time high of just under $170 each. The company said that it split the stock, in large part, to allow more employees to buy into its stock purchase plan. It was Walmart’s first stock split since 1999 and made it easier for investors to afford shares.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
