But even within value names, some are more recession-proof than others. One strategy is to look at companies that have recently been able to grow their dividends. Increasing payouts at a time when other companies fear that cash is scarce is surely a sign of confidence. Even better would be to stick with so-called “dividend aristocrats,” or companies that have been able to raise their dividends for 25 consecutive years.
MORE TO READ “This cohort of stocks has outperformed heading into and out of recessions historically,” Chris Senyek, chief investment strategist at Wolfe Research, wrote Thursday. As a group, dividend aristocrats yield 2.5.%—not a super-exciting yield when short-term Treasury bills yield more than 5% but still a secure spot. The dividend aristocrats’ price-to-earnings ratio relative to the S&P 500 is roughly 0.95x, slightly below 10-year average of 1.03x, implying that the stocks look cheap.