With the debt deal drama now out of the way, I predict a return of “the most predicted recession of all time” to the mainstream news headlines.
Humor aside though, there IS still a very real chance of a recession – and we’re seeing that in the retail numbers that’ve been filtering in.
Should a recession hit, stock valuations will be impacted – many severely so.
As such, it’s prudent for investors to have some “recession resistant” stocks in their portfolio – companies with rock-solid business models that can weather the storm and even come out stronger.
Today’s daily stock pick is one such company. A recession-resistant business model that creates a powerful competitive advantage – leading to consistent income growth (that is also shared directly with investors).
You’d be remiss if you didn’t at least strongly consider this stock for your portfolio.
Costco Wholesale Corporation (COST)
You already know what Costco does. But let me share with you what you might not know – a peek under the hood that reveals why I put this stock in my “beat the recession” portfolio.
Costco has delivered double-digit sales growth on a year-over-year basis for about two years – an impressive streak compared to its usual single-digit growth. And while its recent quarterly results showed a slowdown to a mere 1.9% sales growth, its stock price actually increased on such earnings.
Why? Because when you dive deep into the numbers, the strength of its business model is impossible to ignore. Membership fee income kept steadily increasing, more people are joining, and over 90% of members renew their memberships. If a recession hits, I expect its membership numbers to only surge.
And if you were to plot Costco’s revenue and income on a chart dating back 10 years, you’d see only one thing – a line that moves steadily upward to the right. Such consistency has been reflected in its dividend, which began back in 2004 at $0.40 per share – and is now at $4.08 per share.
On top of that, Costco also has a track record of issuing special dividends to its shareholders, who received special dividends of $10 per share in 2020, $7 per share in 2017, and $5 per share in 2015.
In short, if you’re looking for a steady stock that can weather any recession – and keep paying you health dividends all through it, put Costco at the top of your shopping list.
To your wealth,
Felix @ Ace of Investing