Investors often fear bear markets. But as much as we enjoy bull markets, we also need to embrace the bumpy periods too as part and parcel of how the markets work. We can learn to appreciate these periods by having a solidly diversified portfolio of stocks that work for us in…
different investing environments — and by using bear markets to identify companies with strong, long-term opportunities that should soar when the bull comes back.
I want to recommend four stocks to buy in the next bear market. Two of them can help shield your portfolio when times are rough, and two of them are trading at high valuations and can become better values if prices fall. The first two are Realty Income (NYSE:O) and Costco Wholesale (NASDAQ:COST), and the second two are Square (NYSE:SQ) and Shopify (NYSE:SHOP).
Realty Income: A stable and growing dividend
For income investors, there’s a lot to love about Realty Income. Most notably, it pays a monthly dividend instead of the more common quarterly dividend, and it has paid it for 615 months in a row. What’s more, the company raises the dividend quarterly, and it’s done so for 96 consecutive quarters.
Realty Income operates as a REIT, or real estate investment trust, and it owns more than 6,700 properties globally. Its largest tenants, such as Walgreens and FedEx, are mostly companies that sell essentials — and so do well even in economic downturns. That gives Realty Income stability, and it means you can trust its dividend.
Realty Income is merging with VEREIT, a similar property owner, which will bring its holdings to more than 10,000 properties and make it one of the biggest REITs in the world. That’s even more security for shareholders.
Costco: The case for low prices
Big-box retailer Costco has had a steady and growing stock price for years, nearly doubling the S&P 500‘s gains over the past 10 years. It barely registered the March 2020 market crash, and it’s performed similarly well during other market pullbacks.
That’s because its core model of selling products with razor-thin margins means great deals for members, who flock to the company’s warehouses in all types of economic environments. Sour times often work in its favor since members (who pay an annual fee of $60 for a standard membership or $120 for an executive membership) shop at Costco to get the most out of their memberships and take advantage of its prices.
Costco’s sales shot up when the pandemic started, growing in low double-digits year over year, and they remain elevated even as other pandemic winners have seen their growth return to normal levels. Its stock price…
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