The night Donald Trump was elected our 45th president, it seemed there would be no safe haven from the carnage about to be wrought on the market.
Dow Futures were down more than 800 points, the peso plunged to an all-time low and panic was taking hold of markets all around the globe. Then, A Funny Thing Happened on the Way to the White House — stocks surged. The Dow actually climbed more than 200 points the day after the election, the S&P 500 advanced for three straight days and investors responded with uncharacteristic calm.
That said, four trading days is a small sample size. As with the unpredictable presidential-elect himself, volatility can resurface at any moment. And there are other potential market headwinds besides Trump, such as the impending interest-rate hike, lukewarm economic growth and the ongoing uncertainties surrounding Brexit. So it’s hard to feel confident enough to start pouring new money into stocks just yet.
But it does make sense to have a few safe haven stocks in your portfolio — stocks that are seemingly impervious to market conditions. Given the events of the past week, right now is no exception — even if the market has been surprisingly resilient since last Tuesday.
Here are three stocks that can help build a safe haven to protect you against any delayed post-election volatility:
Stocks to Make a Safe Haven: Johnson & Johnson (JNJ)
Americans aren’t going to stop buying baby shampoo and adult skincare products because of who’s in the White House. Johnson & Johnson (NYSE:JNJ) has been peddling those consumer staples for more than a century. It has also been growing its dividend for more than a half-century, with a current yield of 2.8%.
The company still grows sales more often than not, though profits have been up and down of late. But what hasn’t been up and down is the stock — it boasts a beta of 0.69 and is up over 12% year to date, putting it on track for its fifth “up” year in the last six (the one down year was last year, though the stock fell a scant 1.8%).
The dividend growth alone makes JNJ a strong safe haven for investors, and few stocks are less volatile.
Stocks to Make a Safe Haven: AT&T (T)
Having made an impressively smooth transition from landlines to cell phones, AT&T Inc. (NYSE:T) endures as the second-largest mobile provider in the U.S. and the largest landline provider.
Through all the changes in the telecommunications world, AT&T has remained at the forefront, and its stock has been remarkably consistent. Since 2009, T stock has jumped every year but one (2014, -4.5%), as the company’s sales have improved every year. It has an incredibly low beta of 0.34 — meaning it’s about one-third as volatile as the market — and a very high dividend yield of 5.4%, having increased its quarterly payout every year since 2004.
Going beyond the numbers, being one of the leaders in the thriving mobile industry should help AT&T sustain for years to come.
Stocks to Make a Safe Haven: Nike (NKE)
It helps to be a household name, with a universally recognized brand that’s showcased in major global sporting events such as the Olympics and the World Cup. And yet, Nike Inc (NYSE:NKE) manages to keep things fresh, churning out slick sportswear lines cleverly marketed through catchy commercials.
It’s why the company has grown sales and earnings in all but one year in the last decade.
Nike is a fairly low-drama company, and thus its stock typically avoids wild swings. This year has been a bit different, with the stock down nearly 20% year to date. But 2016 has been the exception for NKE: prior to this year, the stock had appreciated for seven straight years, six of which were double-digit returns.
Given that track record — and a low beta (0.53) despite the recent drop-off — I view this as the perfect time to buy low on a stock that has routinely beaten the market over the last decade.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.
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