U.S. Credit Rating Concerns? Here Are 3 Stocks to Protect Your Portfolio


  • Protect your portfolio from the brunt of credit downgrades with these stock picks.
  • Abbott Laboratories (ABT): Its breakthrough in pacemakers and consistent dividends offer investors secure income and future growth.
  • Walmart (WMT): As consumers focus on basic needs, the company has become the best go-to place for consumers stretching their budgets.
  • Coca-Cola Company (KO): An industry giant that caters to global demand for various drinks and offers investors both income and strong leadership.
U.S. credit rating downgrade - U.S. Credit Rating Concerns? Here Are 3 Stocks to Protect Your Portfolio

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Fear is back in the air. On Aug. 8, 2023, Moody’s rating agency downgraded central U.S. banks due to weaker profits and increased funding risks. These include mid-sized to large banks like Citizens Financial Group (NYSE:CFG), Commerce Bank (NASDAQ:CBSH), States Street Corp (NYSE:STT), and Ally Financial (NYSE:ALLY). In addition, Moody’s (NYSE:MCO) also stated that they’re reviewing banking giants like Truist Financial (NYSE:TFC), BNY Mellon (NYSE:BK), and others for a possible downward revision. This is due to the U.S. credit rating downgrade.

These downgrades and negative reviews struck a blow to the banking sector while it’s still regaining stability after the devastating bank failures in early 2023.

Before Moody’s downgrade, ratings agency Fitch also downgraded the U.S. government’s top credit rating from AA+ to AAA. This U.S. credit rating downgrade has initially pushed traders and investors onto the defensive and lean towards safer investments. While many investors shifted from stocks to treasuries, other investors can take advantage of opportunities presented by defensive, reputable companies that shine during tough times and significant economic downturns.

Let’s look at some stocks to buy for the U.S. credit rating downgrade in 2023.

U.S. Credit Rating Downgrade: Abbot Laboratories (ABT)

Close up of Abbott Laboratories sign at their headquarters in Silicon Valley
Source: Sundry Photography/Shutterstock.com

Abbott Laboratories (NYSE:ABT) is focused on developing and manufacturing healthcare products. ABT’s operations lie in four key segments: diagnostic products, medical devices, nutritional products, and established pharmaceutical products. The company’s product line ranges from gastroenterology, cardiovascular products, respiratory drugs and vaccines, clinical chemistry, transfusion medicine, follow-on formula, adult and other pediatric nutritional products, and other medical essentials. The company has also continuously increased its dividends for the last 51 years, making it a part of the elite Dividend Kings.

While revenue declined by 11.36% year-over-year (YoY) due to decreased Covid-19 test sales, the company still provides its shareholders with excellent prospects and income stability. Abbot’s breakthrough leadless pacemaker AVEIR DR Dual has been given Food and Drug Administration (FDA) approval, making it the first-ever FDA-approved dual chamber leadless pacing system.

The product targets patients with abnormal or slow heart rhythms. These continuous breakthroughs in healthcare and consistently increasing dividend income have made ABT one of our top go-to companies in times of uncertainty.

Walmart (WMT)

Image of Walmart (WMT) logo on Walmart store with clear blue sky in the background
Source: Jonathan Weiss / Shutterstock.com

The second company is a newcomer to the Dividend Kings list. Walmart (NYSE:WMT) is a technology-powered retailer operating retail stores and e-commerce websites. WMT offers its customers an assortment of merchandise and services at everyday low prices. Its operations are done through three segments: Walmart U.S., Sam’s Club, and Walmart International. These segments deliver mass merchandising of consumer products, Walmart Neighborhood Market brands, walmart.com, and other e-commerce brands. Consumers can acquire these products via an exhaustive list of supercenters, supermarkets, warehouse clubs (including Sam’s Clubs), and websites.

The current economic landscape promotes smart spending decisions, and Walmart’s ability to reliably offer low prices across the board makes it stand out from the competition. People who want to purchase affordable necessities like groceries to save on their paychecks are increasing the company’s margins.

Walmart has increased its dividends for 50 years, a symbol of its commitment to give back to providing returns to its shareholders. Walmart’s continued investments in supply chain efficiency and technology will help WMT with future profitability, making the company one of the market bets when investors smell fear.

U.S. Credit Rating Downgrade: Coca-Cola (KO)

Coca-Cola Consolidated sign outside of their building. COKE Stock.
Source: Jonathan Weiss / Shutterstock

The last company on our list is no stranger to investors. It’s one of the biggest names in its industry, and long-term investors have loved the company ever since. Coca-Cola Company (NYSE:KO) is a well-known beverage company for its flagship product, Coca-Cola. Through the years, Coca-Cola has grown its product offering from sugary drinks to coffee, tea, juice, sports drinks, dairy, and plant-based beverages. These products cater to different markets globally and have contributed to the company’s growth and sustainability.

While the economy has been on a roller coaster of positive and negative sentiments, the company has been taking steps to ensure its long-term profitability. Some of these measures include eliminating more than 600 “unproductive products” and diversifying its portfolio away from sugary products like coffee and sports drinks. In addition, the company is very committed to rewarding its shareholders with long-running dividend increases for the last 61 years, making it one of the best stocks to own during economic downturns.

On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2023/08/u-s-credit-rating-concerns-here-are-3-stocks-to-protect-your-portfolio/.

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