With a recession on the horizon, I’m looking for stocks to buy. And I think there are some dividend shares that can boost my finances as economic conditions tighten.
If I buy shares in a company, though, I intend to hold them for years, rather than months. So any business I invest in needs to be able to do well beyond 2023.
Investing for 2023
Various features can make a company resistant to an economic slowdown. One is having a product that will enjoy steady demand because people can’t do without it.
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Another is having a product that has a low price point. Being inexpensive provides protection in a recession because customers can’t make a meaningful savings by cutting it from their budgets.
One way or another, I’m looking for investments that can provide me with a steady return in a difficult economic environment. And I think there are some dividend shares that can do just this.
Philip Morris
With a highly addictive product and strong margins, it’s easy to see why Philip Morris might be a handy divided stock to own in a recession. But I think there are other reasons, too.
Unlike other cigarette companies, Philip Morris does a significant amount of business in regions where the number of smokers is increasing. I think this makes it a great stock to own in 2023.
Philip Morris shares pay a dividend with a yield of around 5%. That’s attractive in itself, but it has also been increasing steadily for over a decade.
Aviva 8⅜% PF 8⅜% CUM IRRD PRF #1
Normally, I’d be suspicious of a stock with a 7% dividend yield. But there are a couple of reasons that I’m not concerned about Aviva’s preferred stock.
As a preferred stock, its dividend has a priority status. That means it has to be paid in full even if the dividend paid to common shareholders gets cut.
With a recession on the horizon, protection against a dividend cut looks like a valuable thing to me. That’s why I’m very happy buying this stock for 2023.
McDonald’s
With a recession on the horizon, I think that McDonald’s shares can be a great investment. The company’s low prices should, in my view, help bring in customers and keep revenues ticking over.
Unlike other restaurant chains, McDonald’s generates revenue by leasing the buildings its restaurants are housed in to franchisees. This additional revenue allows them to keep food prices low.
At 2.2%, the dividend yield isn’t the most eye-catching. But it’s been growing at around 10% per year for the last five years, so I think it’s one that could reward a patient investor.
Realty Income and Agree Realty
Last on my list are two real estate investment trusts (REITs). Both Realty Income and Agree Realty make their money by owning and leasing retail properties.
Importantly, both focus on triple net lease agreements. This means that the costs of the operations are taken on by the tenant, keeping costs down for both companies.
Both companies distribute their earnings as monthly dividends to shareholders. In the hunt for passive income in 2023, I’m looking to buy both stocks.
