At the rate things are going, a recession is likely. All thanks to the Federal Reserve, which once tried — laughably — to convince us inflation was transitory. Now, as they try to get that “transitory” inflation under control, they’re aggressively hiking interest rates, which has only imperiled the U.S. economy. Prices are still sky-high. Job losses are mounting, with companies, like Microsoft (NASDAQ:MSFT) cutting 10,000 jobs. And consumers are cutting back on spending.
So, the best thing to do is position your portfolio for the potential downside. One way to do that is to keep an eye on the stocks every smart investor should own in 2023.
Medical Properties Trust (MPW)
High-yielding stocks, like Medical Properties Trust (NYSE:MPW) should do well. With a yield of 8.7%, the real estate investment trust ( ) is a defensive investment against market volatility. After all, we always need hospitals, with the healthcare industry being one of the largest stock market sectors. Plus, we have to consider that healthcare spending is expected to top $6.2 trillion by 2028, according to the Centers for Medicare & Medicaid Services ( ).
That’s all beneficial for Medical Properties Trust, which has invested in 447 medical properties and is now one of the world’s biggest hospital owners. It’s also been able to raise its dividend payments for the last eight years and may be able to raise them even more going forward.
Global X Super Dividend ETF (SDIV)
Or, look at a dividend stock exchange-traded fund (ETF) like the Global X Super Dividend ETF (NYSEARCA:SDIV), which carries a dividend yield of 11.6%, and has made regular monthly distributions for the last 11 years. The ETF holds 108 stocks spread across mortgage REITs, financials, energy, materials, utilities, industrials, and consumer discretionary.
Top holdings include Imperial Brands (OTCMKTS:IMBBY), Omega Healthcare (NYSE:OHI), Starwood Properties (NYSE:STWD), Arbor Realty (NYSE:ABR), Lumen (NYSE:LUMN), Annaly Capital (NYSE:NLY), Chimera Investment (NYSE:CIM), and dozens more.
Dollar Tree (DLTR)
Dollar store stocks, like Dollar Tree (NASDAQ:DLTR) are attractive in recessions. Additionally, with inflation showing no signs of cooling off, dollar stores are attracting higher-income shoppers. In fact, management at Dollar General says consumers earning $100,000 per year are helping drive growth as a challenge like inflation bites into their spending power.
“The consumer is trying to make ends meet, and when you have limited funds in your wallet, the dollar stores provide the ability to do that,” added Joseph Feldman, a senior analyst at Telsey Advisory Group, as quoted by The New York Times.
Better, business is booming. Diluted EPS was up 25% to $1.20 in the third quarter. Net sales were up 8.1% year over year to $6.94 billion. Operating income jumped 22.8% to $381.3 million. The company also added another 102 new stores.
W.P Carey (WPC)
With a yield of 5.16%, WP Carey (NYSE:WPC) is a net lease real estate investment trust that buys properties directly from companies and then leases them back to an oftentimes reliable tenant. It’s also called a lease-back.
Or, where “a company sells its real estate to an investor like WP Carey for cash and simultaneously enters into a long-term lease. In doing so, the company extracts 100% of the property’s value and converts an otherwise illiquid asset into working capital to reinvest in its business or pay down debt, while maintaining operational control,” as noted by the company. Also, its rental agreements include contractual rent increases for inflation, according to BNK Invest. In fact, about 60% of the agreements are tied to the consumer price index.
Another hot, recession-proof stock to consider is Coca-Cola (NYSE:KO). With strong demand and solid earnings growth, KO is one of the safest stocks to own. The company is also a dividend king, raising its dividend for the last 60+ years. This stock currently carries a yield of 2.95% and continues to be one of the safest stocks on the market. It last raised its dividend in December to 44 cents, and I expect to hear of another hike shortly.
That, and it doesn’t hurt that Coca-Cola is one of Warren Buffett’s favorite stocks. We also have to consider that beverage demand isn’t going out of style, which is why KO is doing about $38.7 billion in annual sales, with plenty of opportunity ahead of it.
Procter & Gamble (PG)
When the economy goes down the toilet, remember that millions of people still need to eat, brush their teeth, use the bathroom, do laundry, shower, etc. All of which companies, like Procter & Gamble (NYSE:PG) provide. In fact, some of the company’s biggest products include diapers, detergents, paper towels, tissues, shaving products, shampoos, home care products, and toothpaste, you get the point. Even in recessions, we still need our necessities.
Even more impressive, the company has paid a dividend for 132 consecutive years since 1890 and has increased its dividend for 66 consecutive years. In January, the company increased its quarterly dividend to $0.9133, payable after Feb. 15 to shareholders of record at the close of business on Jan. 20. PG currently yields 2.57%.
AbbVie (NYSE:ABBV) had a strong 2022. I expect 2023 to be just as strong, even with impending patent expirations on its Humira drug. Helping ABBV just increased its quarterly dividend to $1.48 a share from $1.41, or $5.92 annualized. The stock has a current yield of just under 4%.
Sure, its $200 billion Humira drug lost protection in Europe and will face increased competition from biosimilars in 2023, but don’t write the stock off just yet. In fact, we have to remember that the company’s Skyrizi and Rinvoq drugs could bring in about $15 billion in sales over the next three years. That alone should take away the sting of Humira.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.