The Fed-Proof Portfolio: 3 Overlooked Stocks Built for Long-Term Success


  • Finding stocks that can perform regardless of shifting monetary policy mandates is important to many investors.
  • Restaurant Brands International (QSR): Its portfolio of world-class fast food brands provides investors with long-term defensive growth.
  • Devon Energy (DVN): DVN stands to gain from surging energy prices, but will remain cash flow positive at much lower levels.
  • Allstate (ALL): Lower borrowing costs will benefit this stock, but it can thrive in any environment.
Fed-proof stocks - The Fed-Proof Portfolio: 3 Overlooked Stocks Built for Long-Term Success

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The economic outlook remains uncertain, and monetary policy plays a big role in shaping this outlook for investors. We have no idea when the Federal Reserve will cut rates (or if they will), given how stubborn inflation has been. Certain stocks have been unduly impacted by previous rate hikes and others are surging ahead of anticipated cuts. But if the Fed doesn’t do what is expected, some stocks could be in for a rude awakening.

That is where buying Fed-proof stocks may make sense. Certain companies perform well regardless of the monetary policy stance in play at any given point in time. These are the sorts of defensive companies I think investors should be focused on right now.

For those looking to diversify into three defensive names, here’s where I’d start looking right now.

Restaurant Brands International (QSR)

a tray of food from popeyes
Source: Tony Prato /

Restaurant Brands International (NYSE:QSR) is among my top picks for investors seeking truly defensive exposure to the consumer discretionary sector. A purveyor of fast food chains, the Canada-based company provides investors with exposure to four key banners I think are world-class. Those include Tim Horton’s, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs. Accordingly, the company’s cash flow profile is diversified and has remained strong, allowing for a consistent dividend yield of around 3% in recent years.

Notably, the company has also put forward ambitious growth plans, hoping to grow to more than 40,000 restaurants in the coming years with $60 billion in revenue. If that takes place, the company’s current valuation will certainly seem attractive.

Folks need to eat, and in any economic climate, that will remain true. However, if the economy declines, as many expect, the trade-down effect could actually bolster this company’s position in the market. It’s my view that QSR stock is the way to take a defensive stance on consumer spending, and it remains among my top picks in the market right now for this reason.

Devon Energy (DVN)

The logo for Devon Energy (DVN) is displayed on a sign outside an office.
Source: Jeff Whyte /

Although there have been some issues in the oil and gas industry of late, one stock investors should consider is Devon Energy (NYSE:DVN). The company is known for its significant contributions to natural gas and oil production. Devon remains a crucial player in the sector with their strategic acquisitions and advancements, powering industries, homes and businesses across the world.

As 2024 entered, the company proudly announced that its cash dividend of $0.22 per share was recently paid to its investors on Thursday, March 28. That increased $0.20 per share, although it was lower than its previous 2023 quarters. The company’s annual dividend is $0.88, showcasing a 1.81% dividend yield and a price-earnings ratio of 8.3 times.

Devon Energy’s dividend model blends fixed and variable components, offering substantial rewards during market upswings. That has made it appealing for investors who are always on the lookout in the market, but there may be better options for investors who seek steady income. However, with a 9% rise in shares, Devon Energy is one of the investments that generates long-term capital appreciation. I don’t think that will change regardless of where energy prices are. That’s because this company breaks even at much lower levels, so it’s a relatively safe bet in this otherwise volatile space.

Allstate (ALL)

Allstate Insurance office
Source: Jonathan Weiss /

The following stock that we’re featuring is among the most underestimated recession-proof stocks not all investors are interested in owning. But guess what, Northbrook-based Allstate (NYSE:ALL) is a stock one shouldn’t miss out on, especially since the company is third of the largest property-casualty insurers in the United States.

The company offers a wide selection of insurance and investment products and serves over 16 million households nationwide and in Canada.

When it comes to low-interest rate stocks, ALL is surely promising. Lower rates benefit Allstate’s bond portfolio, increasing its value and desirability. Additionally, a stimulated economy prompts higher demand for financial coverage, positioning ALL as a favorable post-Fed decision stock pick. Recently, the company received an upgrade from HSBC (NYSE:HSBC), in which the firm changed from Hold to Buy, with a price target of $190. Other investors and analysts also followed the movement, some shifting to a Moderate Buy with an average target price of $165.

On the date of publication, Chris MacDonald did not hold (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 Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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