2 Resilient Stocks to Buy and Hold Through a Recession

NYSE: JNJ | Johnson & Johnson News, Ratings, and Charts

JNJ – The World Bank has warned about a global recession next year. Moreover, although the October inflation report shows signs of cooling price pressures, inflation is still far from the Fed’s target level. Hence, we believe fundamentally solid dividend-paying stocks Johnson & Johnson (JNJ) and McDonald’s Corporation (MCD) could be ideal investments to navigate a recession. Read on….

According to the World Bank, as central banks worldwide simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023.

The Labor Department reported that consumer prices rose a seasonally adjusted 0.4% in October from a month earlier, putting them up 7.7% from a year earlier. Although the inflation report is likely to soften the Fed’s grumpy mood, questions still hover over how much higher it will lift them in the coming months.

Dallas Fed President Lorie Logan, in a speech in Houston yesterday, said, “This morning’s CPI data were a welcome relief, but there is still a long way to go.”

The aggressive stance to battle inflation amidst a slowing economy is increasing the appeal of dividend-paying stocks. In these uncertain times, fundamentally solid stocks Johnson & Johnson (JNJ) and McDonald’s Corporation (MCD), which have a solid dividend-paying history, could be appropriate choices to buy and hold through a recession.

Johnson & Johnson (JNJ)

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through the broad segments of Consumer Health; Pharmaceuticals; and MedTech.

On November 1, JNJ announced that it had entered into a definitive agreement with Abiomed, Inc. (ABMD) to acquire all outstanding ABMD shares through a tender offer for an enterprise value of approximately $16.60 billion. The agreement is expected to broaden JNJ’s MedTech segment’s position as a cardiovascular innovator.

On September 20, JNJ opened its San Francisco Bay Campus, a cutting-edge Research and Development (R&D) center in the Bay Area. The facility connects essential scientific and technical resources and is expected to expand the company’s presence in the area.

On July 18, JNJ declared a quarterly dividend of $1.13 per common share, which was payable to shareholders on September 6. Its annual dividend of $4.52 yields 2.59% on the current share prices.

The company’s dividend payouts have increased at a 5.8% CAGR over the past three years and a 6% CAGR over the past five years. On top of it, JNJ has a record of 59 years of consecutive dividend growth.

JNJ’s gross profit increased 1.8% year-over-year to $47.91 billion in the fiscal third quarter that ended September 30, 2022. Its sales to customers grew 3.3% from the year-ago value to $71.24 billion, while its net earnings improved 21.6% year-over-year to $4.46 billion. The company’s net earnings per common share rose 22.6% from its year-ago value to $1.68.

The consensus EPS estimate of $10.04 for the current fiscal year ending December 2022 indicates a 2.5% improvement year-over-year. Its revenue is expected to increase by 1.4% year-over-year to $95.04 billion for the same year. Additionally, JNJ has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 8.8% over the past month to close its last trading session at $174.47.

JNJ’s POWR Ratings reflect this promising outlook. The stock’s overall A rating translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

JNJ is rated an A in Stability and a B in Quality. Within the Medical – Pharmaceuticals industry, it is ranked #9 out of 163 stocks.

To see additional POWR Ratings for Momentum, Growth, Value, and Sentiment for JNJ, click here.

McDonald’s Corporation (MCD)

MCD operates and franchises its restaurants in the United States and internationally. The company’s segments include the United States (U.S.), International Operated Markets (IOM), and International Developmental Licensed Markets & Corporate (IDL).

On September 14, 2022, MCD announced the establishment of a new facility, Speedee Labs, aimed at a new innovative environment creating more opportunities for collaboration and end-to-end development of restaurant solutions and technologies.

On October 13, MCD declared a quarterly cash dividend of $1.52 per share of common stock payable on December 15, 2022, representing an increase of 10% over the Company’s previous quarterly dividend.

Its annual dividend of $6.08 yields 2.2% on the current share prices. The company’s dividend payouts have increased at a 6% CAGR over the past three years and an 8% CAGR over the past five years. Moreover, the company has a record of 20 years of consecutive dividend growth.

During the fiscal third quarter that ended September 30, 2022, MCD’s revenues from franchised restaurants increased 4.6% year-over-year to $3.67 billion. Its total operating costs and expenses decreased 3.3% year-over-year to $3.11 million, while the company reported its non-GAAP EPS to be $2.68.

Street expects MCD’s EPS to grow 7.1% year-over-year to $9.94 in the current fiscal year ending December 2022. It has surpassed EPS estimates in three of four trailing quarters.

Over the past month, the stock has gained 19.4% to close the last trading session at $275.88.

It is no surprise that MCD has an overall B rating, which equates to a Buy in our POWR Ratings systems. The stock has an A grade for Quality and a B for Stability and Sentiment. Within the B-rated Restaurants industry, it is ranked #15 out of 44 stocks.

Click here to see the additional POWR Ratings for Growth, Value, and Momentum for MCD.


JNJ shares were trading at $169.26 per share on Friday morning, down $5.21 (-2.99%). Year-to-date, JNJ has gained 0.89%, versus a -15.83% rise in the benchmark S&P 500 index during the same period.


About the Author: Kritika Sarmah


Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...


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