Latest news with #recessionproof
Yahoo
2 days ago
- Business
- Yahoo
2 Recession-Proof Dividend Stocks to Buy for the Second Half of 2025
With economic uncertainty looming in the second half of 2025, as well as lingering inflationary pressures and potential interest rate changes, investors are becoming more cautious about where to invest their money. Here's where dividend stocks shine. The most compelling ones are recession-proof businesses with long-term demand, strong balance sheets, and a consistent track record of rewarding shareholders. Here, we highlight two such recession-proof dividend stocks that not only provide consistent income, but also resilience during turbulent times. More News from Barchart Is This Dividend Stock Still a Buy After Rising Nearly 46% in 3 Months? 3 Dividend Stocks With 100+ Years of History and Sky-High Growth Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! Dividend Stock #1: Johnson & Johnson Johnson & Johnson (JNJ), the global healthcare giant with a more-than-135-year legacy, continues to stand out for its diverse business model, consistent dividend history, and strong balance sheet. After it spun off its consumer division in 2023, Johnson & Johnson's operations are now divided into two main business segments: innovative medicines (formerly pharmaceuticals) and MedTech (formerly medical devices). Johnson & Johnson is a Dividend King, having increased its dividend for 63 straight years. The company's forward dividend yield of 3.1% is comfortably higher than the 1.6% average for the healthcare sector. With a 45.8% payout ratio (the amount of earnings that can be paid as dividends), there is still plenty of room for future increases. A reasonable payout ratio allows a company to pay dividends while still having enough money to reinvest in the business. J&J raised its quarterly dividend by 4.8% in April to $1.30 per share, marking the 63rd dividend increase. In the second quarter, Johnson & Johnson's operational sales increased by 4.6% year over year, but adjusted earnings per share fell 1.8% to $2.77. The MedTech segment saw the highest (7.3%) increase in sales in the quarter. J&J is also leveraging Nvidia's (NVDA) AI-powered platforms to help boost growth in its MedTech segment in the coming years. At the end of the second quarter, J&J had $19 billion in cash and marketable securities and $32 billion in net debt. However, it generated $6 billion in free cash flow, which should help to effectively reduce its debt burden. In the second quarter, J&J returned $3.1 billion to shareholders through dividends. Analysts project Johnson & Johnson's earnings to grow by 8.8% in 2025 and 4.4% in 2026. JNJ stock is currently trading at 13 times forward estimated 2025 earnings, which is significantly lower than its five-year historical average price-earnings (P/E) ratio of 22.2x. This allows investors to buy a blue-chip, recession-proof dividend stock at a discount. Healthcare, unlike discretionary sectors, experiences consistent demand regardless of macroeconomic cycles. This makes J&J one of the few recession-resistant dividend stocks with both defensive strength and long-term growth prospects. Overall, Wall Street rates JNJ stock as a 'Moderate Buy.' Of the 23 analysts covering JNJ, nine rate it as a 'Strong Buy,' two as a 'Moderate Buy,' and 12 as a "Hold.' The mean target price for JNJ is $175.18, which is nearly 6.6% above current levels. The Street-high estimate for the stock is $190, which implies upside potential of 15.6% over the next 12 months. Dividend Stock #2: PepsiCo PepsiCo (PEP) is a consumer staples giant that owns a diverse portfolio of iconic food and beverage brands such as Pepsi, Lay's, Gatorade, Tropicana, Doritos, Mountain Dew, and Quaker. PepsiCo has also earned the title of Dividend King. The company recently hiked its dividend by 5%, which marked its 53rd consecutive dividend increase. PepsiCo maintains a healthy payout ratio of 67%, leaving enough to reinvest in the business. The company also offers an attractive forward dividend yield of 3.9%, higher than the consumer staples sector average of 1.89%. Despite economic pressures such as commodity inflation, shifting consumer habits, and geopolitical instability, PepsiCo has maintained consistent revenue growth. In the second quarter, organic revenue increased by 2.1%. Analysts predict that the company's earnings will fall by 2% in 2025, before rising by 5.8% in 2026. PepsiCo's ability to pass on higher input costs to consumers without significant volume declines highlights the pricing power of its brand portfolio. Even in an inflationary environment, consumers continue to spend money on their favorite snacks and beverages, making PepsiCo a resilient business. Overall, on Wall Street, PepsiCo stock is a 'Moderate Buy.' Out of the 20 analysts covering the stock, six have a 'Strong Buy," 13 suggest a 'Hold,' and one recommends a 'Strong Sell' rating. The mean target price for PEP is $149.58, which is 5.6% above its current levels. The Street-high estimate for the stock is $169, which implies an upside potential of 19.3% over the next 12 months. On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
CNA
30-05-2025
- Business
- CNA
‘Treasure hunting' shoppers propel dizzying rise of Malaysia's dollar stores as inflation bites
KUALA LUMPUR: In the leaner days leading up to her payday each month, supermarket cashier Azura Hanib turns to her local Eco-Shop in Selayang, Selangor, for everyday items such as dishwashing liquid. At the budget-friendly chain store, most items, from biscuits to baby wipes, retail for RM2.60 (US$0.61), allowing Azura to stretch her dollar. 'Being able to buy things in small quantities – dish wash, a few exercise books – makes some difference," Azura, 44, told CNA while shopping with her 13-year-old daughter. "With how difficult life is, you really have to be mindful of every single cent," added the mother of four children aged 10 to 20. Since 2003 when it was started by businessman Lee Kar Whatt, his brother and two other people, Eco-Shop has expanded to over 350 stores across the country by catering to budget-conscious consumers. It became Malaysia's biggest initial public offering (IPO) so far this year on May 23, listing on the Main Market of Bursa Malaysia. It ended its first day of trading at RM1.20, above the IPO price of 1.13 per share, making its founder Lee a billionaire. The successful IPO highlighted the strength and potential of a business model offering consumers affordability amid economic uncertainty, analysts said. "Because everybody wants to save money, dollar stores are generally seen as recession-proof. That's where people go, especially those in the low-income (B40) and some in the middle-income (M40) bracket," said Vincent Lau, equities broker Rakuten Trade's head of equity sales. CNA takes a closer look at the rise of value chain stores in Malaysia and elsewhere, as well as what could curb their growth. RISE OF DOLLAR STORES IN MALAYSIA Starting with one RM2 store in the town of Gemas in Negeri Sembilan, Eco-Shop has grown to become Malaysia's leading dollar store chain and currently has 358 outlets across the country. In its prospectus, it said it plans to add an average of 70 new stores annually for the next five years. The company is worth about RM6.67 billion after its listing. The vast majority of its more than 10,000 items each cost RM2.60 in Peninsular Malaysia and RM2.80 in East Malaysia. Eco-Shop has also launched 22 Eco-Plus format stores featuring a wider range of products at various prices. Its net profit has risen from RM27.09 million in 2022, to RM105.07 million in 2023 and RM177.28 million last year. While Eco-Shop is the biggest dollar store player in Malaysia and commands almost 70 per cent market share, there are several other players such as Ninso and Eko Jimat. Ninso originated in Kluang, Johor in 2017, and now has 99 outlets across the country. Eko Jimat has 72 stores, while Japanese chain Daiso, whose items are mostly RM5.90 each, has 70 stores. NT Shop has 36 stores, while Setia has 34 stores. Predominantly located on individual shoplots, some of these stores have also set up in malls. According to a market research report by consulting firm Frost & Sullivan for Eco-Shop's IPO, the dollar store-based retail segment in Malaysia has experienced significant sales growth from around RM1 billion in 2016 to RM4 billion in 2024. While their popularity may not be surprising to some, others have found it remarkable. "I'm actually quite surprised at how big the dollar store trend has gotten,' said Mydin Hypermarket founder and managing director Ameer Ali Mydin, who has 70 branches in Malaysia. With the ringgit weakening over the years and one American dollar now equivalent to RM4.25, 'you kind of think, 'What can you really buy for RM2.60?', Ameer said. 'But they seem to have enough things to keep people coming back," he said, adding that he does not intend to enter the fray as he did not want to spread his business thinly. A walk through the Eco-Shop and Ninso branches in Selayang reveals no shortage of items ranging from the practical to the whimsical at the RM2.60 price point. Besides plastic containers, file covers, a pack of 80 baby wipes, 500ml hand wash, shampoo, flower pots and tools such as spanners and sets of allen-keys, there are also toys and capybara-themed hairbands. The shops also sell food items such as biscuits, chocolates and snacks. Frost & Sullivan's report indicated further growth potential, noting that as of last year, the sector in Malaysia had a penetration rate of 23 stores per million population. The rate is low compared to more mature markets such as Japan, which has 87 stores per million population, the United States with 119 stores per million population, and Canada with 127 stores per million population. The report estimated that the penetration rate of dollar stores within Malaysia is 1.5 per cent of the sales value of the store-based retail sector. Sales in Malaysia's dollar store industry are projected to reach RM7.8 billion by the end of 2029, it stated, up 95 per cent from 2024's RM4 billion. 'These stores have proven to be recession-proof, offering affordable options during economic downturns and high inflation rates,' Frost & Sullivan wrote. 'By providing a range of homogeneous goods at fixed prices, dollar stores attract new customers who would typically shop at higher-priced retailers, especially during times of economic uncertainty,' it said. The concept also exists in other Southeast Asian nations like Singapore, with stores such as Valu$, and Thailand where there are 20-baht shops. In Japan, meanwhile, 100-yen shops have become a fixture in the retail landscape. Eco-Shop's chief executive Jessica Ng told CNA that the fixed-price retail model has gained global traction, particularly during periods of economic uncertainty. 'In Malaysia, we have seen growing demand for value-retailing, driven by rising cost-of-living concerns and increasing consumer awareness of smart spending,' she said via email. 'Notably, value retail has become more mainstream, attracting not just lower-income shoppers but also middle-income households looking for everyday essentials at affordable prices,' she said. Eco-Shop's business model tends to be countercyclical – during inflationary periods or economic slowdowns, consumers become more price-sensitive, which tends to drive more traffic to fixed-price retailers, she added. HOW ARE DOLLAR STORES ABLE TO SELL SO CHEAP? What is the secret behind these dollar stores' ability to sell products relatively cheaply? Economist Yeah Kim Leng, while surprised at the variety of items on sale for less than the price of a coffee, attributed it to the bulk purchasing ability of dollar stores. Ng of Eco-Shop said its business model is built on high volume and scale – products are bought in bulk, so the company is able to sell them cheaply. The fixed-price model boils down to scale, efficiency and strategic sourcing, she said. 'Our sourcing strategy is very deliberate. We've built strong, long-term relationships with suppliers from Malaysia and different parts of the world,' she said. 'Over the years, we've also established direct factory relationships, which helps us get better pricing and avoid middleman costs.' Dollar stores are not immune to price pressures and other challenges, however. Just last month, Eco-Shop and Ninso hiked their prices from RM2.40 to RM2.60. According to analyst reports, such stores are also labour-intensive and dependent on both foreign labour and suppliers. Ng said key challenges range from managing rising costs from supply chain disruptions and foreign exchange fluctuations, to higher freight and logistics expenses. Its draw lies not only in affordability, but also variety, Ng added. Which is why each Eco-Shop outlet offers 5,000 to 11,000 items. 'Whether it's homeware, personal care, snacks, or stationery, we make it a point to keep our product assortment fresh and relevant so that every trip to the store feels like there's something new to discover,' she said. While Yeah noted there is competition from other brick-and-mortar stores as well as the global online marketplace – Chinese e-commerce giant Taobao launched a Malay-language interface that automates translation across the platform this week, for instance – dollar stores enable customers to 'have a feel' of the items on offer. 'That is why these stores can do well,' he said. And while customers appreciate the affordability and range of items at value stores, some are mindful of impulse purchases while others say they would visit other shops and pay more for certain items. Mary Agnes, 50, from Batu Caves, told CNA nearly half of her purchases from monthly visits to Eco-Shop are unintended – a behaviour Frost & Sullivan's report terms 'treasure hunting'. 'The perception of getting a good deal can drive impulse buys, even for things people might not need,' Mary acknowledged. Mechanic Hazri Mukeri, 45, who is from Selayang, said that while stores such as Ninso and Eco-Shop are useful for small items such as plastic containers, he would be pickier when it comes to tools needed for work. 'Of course, you can purchase some things such as cable ties (here) but when it comes to tools such as spanners, the items sold would not last as long as those pricier products found in proper hardware stores, for example,' he said.
National Post
25-05-2025
- Business
- National Post
How Canadians can create a financial storm shelter to prepare for a possible recession
A myriad of challenges have been plaguing Canadians' personal finances, from the high cost of living to the global trade war that has roiled markets and the economy. It likely has some asking how they can better safeguard — or even recession-proof — their finances. Article content Article content Experts say while there's no silver bullet, there are several ways people can better position themselves to weather any economic storms. Article content Article content Many households are still feeling the pinch from the high cost of living and some are facing or have faced higher mortgage payments upon renewal. On top of that, on-again-off-again tariffs stemming from U.S. President Donald Trump's global trade war have caused disruptions in the world economy and taken a toll on consumer sentiment. Article content April inflation data from Statistics Canada showed a sharp slowing in the annual rate to 1.7 per cent from 2.3 per cent in March. However, the underlying details signalled stronger price increases. For example, grocery store inflation outpaced the overall consumer price index for a third month in a row. Article content Elke Rubach, president of Rubach Wealth: Holistic Family Advisors, says recession-proofing is about preparation. Article content Article content The conversation starts with taking the time to see where a person is headed, Rubach said. Article content 'You can't control the markets. You can control your spending,' she said. 'It starts honestly with being incredibly, brutally honest with a cash flow review.' Article content Macmillan said she's been relaying to clients the need to go back to basics: reviewing their budget and paying down debt.
CTV News
25-05-2025
- Business
- CTV News
‘Winging it is not a plan': How to shore up your finances in uncertain times
Natasha Macmillan, everyday banking expert, seen in this handout photo, says going back to the basics such as budgeting and paying down debt are important to recession-proof finances. THE CANADIAN PRESS/ **MANDATORY CREDIT** A myriad of challenges have been plaguing Canadians' personal finances, from the high cost of living to the global trade war that has roiled markets and the economy. It likely has some asking how they can better safeguard — or even recession-proof — their finances. Experts say while there's no silver bullet, there are several ways people can better position themselves to weather any economic storms. 'People aren't sure what to do with their finances, how to save for themselves, and as we can call it, even recession-proof their finances,' said Natasha Macmillan, everyday banking expert. 'There's a lot of uncertainty and people are feeling uncomfortable.' Many households are still feeling the pinch from the high cost of living and some are facing or have faced higher mortgage payments upon renewal. On top of that, on-again-off-again tariffs stemming from U.S. President Donald Trump's global trade war have caused disruptions in the world economy and taken a toll on consumer sentiment. April inflation data from Statistics Canada showed a sharp slowing in the annual rate to 1.7 per cent from 2.3 per cent in March. However, the underlying details signalled stronger price increases. For example, grocery store inflation outpaced the overall consumer price index for a third month in a row. Elke Rubach, president of Rubach Wealth: Holistic Family Advisors, says recession-proofing is about preparation. 'It's not (about) timing a market but really structuring your life,' she said. The conversation starts with taking the time to see where a person is headed, Rubach said. 'You can't control the markets. You can control your spending,' she said. 'It starts honestly with being incredibly, brutally honest with a cash flow review.' Macmillan said she's been relaying to clients the need to go back to basics: reviewing their budget and paying down debt. Setting a realistic budget, but without being heavily restrictive on spending, could help boost your savings, she said. Macmillan said it's always good to review your debts and identify any opportunities to save on interest. That can be done by transferring balances from high-interest credit cards to lower-rate options, making additional principal payments if you have extra funds, or negotiating better terms with lenders. Another step toward recession-proofing your finances is building your emergency fund, Macmillan said. 'Aim to save at least three to six months of essential living costs in an accessible account,' she said. Macmillan recommended putting emergency funds in a separate high-interest savings account to allow easy access if you need it, but also earns some interest. 'Any extra dollar that you can put away to savings, whether it's cutting on your budget or paying less interest will set you up for success in the long run,' she said. 'Every extra dollar really matters in uncertain times.' Macmillan said her advice has shifted toward stability and resilience. 'There has been a shift toward low-risk investment strategies that emphasize short-term stability rather than merely pursuing long-term growth,' she said. Rubach recommends taking stock of what you're invested in. 'We do expect volatility. Can you stomach it? How much can you stomach and for how long?' she asked. If there's a sense of nervousness, she suggests rebalancing the portfolio. Rubach said permanent life insurance could also add a security blanket when shoring up your financial situation. 'I don't believe that insurance is a solution for everything, but for the right person, a permanent insurance policy can … be a good piggy bank because you build equity over time,' she said. Overall, she said it's about having a plan that will ultimately be your parachute in difficult circumstances. 'Winging it is not a plan,' she said. 'It's having your house in order, your insurance, your retirement plan, your succession.' Macmillan said it's important to look at the current economic state and adjust your money decisions. 'We're unsure where we are in the market currently, but it is important to start to build that emergency fund should anything happen in the next few months or quarters,' Macmillan said. This report by The Canadian Press was first published May 25, 2025. Ritika Dubey, The Canadian Press
Yahoo
25-05-2025
- Business
- Yahoo
'Winging it is not a plan': How to shore up your finances in uncertain times
A myriad of challenges have been plaguing Canadians' personal finances, from the high cost of living to the global trade war that has roiled markets and the economy. It likely has some asking how they can better safeguard — or even recession-proof — their finances. Experts say while there's no silver bullet, there are several ways people can better position themselves to weather any economic storms. "People aren't sure what to do with their finances, how to save for themselves, and as we can call it, even recession-proof their finances," said Natasha Macmillan, everyday banking expert. "There's a lot of uncertainty and people are feeling uncomfortable." Many households are still feeling the pinch from the high cost of living and some are facing or have faced higher mortgage payments upon renewal. On top of that, on-again-off-again tariffs stemming from U.S. President Donald Trump's global trade war have caused disruptions in the world economy and taken a toll on consumer sentiment. April inflation data from Statistics Canada showed a sharp slowing in the annual rate to 1.7 per cent from 2.3 per cent in March. However, the underlying details signalled stronger price increases. For example, grocery store inflation outpaced the overall consumer price index for a third month in a row. Elke Rubach, president of Rubach Wealth: Holistic Family Advisors, says recession-proofing is about preparation. "It's not (about) timing a market but really structuring your life," she said. The conversation starts with taking the time to see where a person is headed, Rubach said. "You can't control the markets. You can control your spending," she said. "It starts honestly with being incredibly, brutally honest with a cash flow review." Macmillan said she's been relaying to clients the need to go back to basics: reviewing their budget and paying down debt. Setting a realistic budget, but without being heavily restrictive on spending, could help boost your savings, she said. Macmillan said it's always good to review your debts and identify any opportunities to save on interest. That can be done by transferring balances from high-interest credit cards to lower-rate options, making additional principal payments if you have extra funds, or negotiating better terms with lenders. Another step toward recession-proofing your finances is building your emergency fund, Macmillan said. "Aim to save at least three to six months of essential living costs in an accessible account," she said. Macmillan recommended putting emergency funds in a separate high-interest savings account to allow easy access if you need it, but also earns some interest. "Any extra dollar that you can put away to savings, whether it's cutting on your budget or paying less interest will set you up for success in the long run," she said. "Every extra dollar really matters in uncertain times." Macmillan said her advice has shifted toward stability and resilience. "There has been a shift toward low-risk investment strategies that emphasize short-term stability rather than merely pursuing long-term growth," she said. Rubach recommends taking stock of what you're invested in. "We do expect volatility. Can you stomach it? How much can you stomach and for how long?" she asked. If there's a sense of nervousness, she suggests rebalancing the portfolio. Rubach said permanent life insurance could also add a security blanket when shoring up your financial situation. "I don't believe that insurance is a solution for everything, but for the right person, a permanent insurance policy can … be a good piggy bank because you build equity over time," she said. Overall, she said it's about having a plan that will ultimately be your parachute in difficult circumstances. "Winging it is not a plan," she said. "It's having your house in order, your insurance, your retirement plan, your succession." Macmillan said it's important to look at the current economic state and adjust your money decisions. "We're unsure where we are in the market currently, but it is important to start to build that emergency fund should anything happen in the next few months or quarters," Macmillan said. This report by The Canadian Press was first published May 25, 2025. Ritika Dubey, The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
