2 Recession Resistant Dividend Stocks to Buy Now While They’re Still Cheap

When a recession hits, investors tend to take their money out of speculative, high-risk stocks and put it into safer companies, those with businesses built to perform relatively well across the entire economic cycle. Now might be a good time to at least explore doing so. We aren’t sure that a recession will hit soon, but it now seems more likely than it was even three months ago, given rising oil prices and geopolitical tensions. Let’s consider two stocks that could be safe havens during a recession, and that also happen to be attractively valued: CVS Health (NYSE: CVS) and Bristol Myers Squibb (NYSE: BMY).

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For investors worried about a recession, CVS Health is worth serious consideration. The company’s business — featuring a vast network of pharmacies across the U.S., a large insurance business, and small but growing footprints in primary care — is built to perform relatively well during recessions. CVS Health’s dividend program is another thing to consider. Regular payouts can help smooth out market losses during downturns.

Over the past 20 years — which includes the 2008 financial crisis, the pandemic-related disruption, and many other shocks to the economy and broader equity markets — CVS has maintained its dividend program without resorting to payout cuts.

CVS Dividend Chart
CVS Dividend Chart

CVS Dividend data by YCharts

CVS Health could also be a great long-term stock, as the company should benefit from increased demand for medical care driven by an aging population. Meanwhile, the stock looks reasonably valued, trading at 10.3x forward earnings, compared to the healthcare sector average of 16.8x.

CVS Health is well equipped to address various challenges, as it has before, and continues to perform well in the long run. That’s why the stock is a buy today.

Bristol Myers’ shares look particularly cheap right now. The company is trading at 9.5x forward earnings. While it is true that it has encountered patent cliffs in recent years — and will face more in the next few — Bristol Myers has also launched plenty of new products that should help it bounce back once the effect of older, off-patent medicines fades.

The company even launched a new, subcutaneous version of its oncology medicine, Opdivo, that has been a major growth driver for years. Opdivo will soon run out of patent exclusivity, too, but the new formulation won’t and should contribute to Bristol Myers’ top line for years.

The drugmaker’s vast portfolio of medicines across multiple therapeutic areas can also help it navigate recessions. No one wants to stop taking drugs that treat severe, chronic, or lifesaving conditions, regardless of what the economy is doing. Lastly, Bristol Myers also has a solid dividend program and has not suspended or reduced its dividend in the past two decades, further evidence that it can navigate downturns.

BMY Dividend Chart
BMY Dividend Chart

BMY Dividend data by YCharts

Bristol Myers is a top pick for income seekers preparing their portfolios for a recession.

Before you buy stock in CVS Health, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CVS Health wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

2 Recession Resistant Dividend Stocks to Buy Now While They’re Still Cheap was originally published by The Motley Fool

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