By: Dividend Sensei
Fears of a recession are mounting, with BAC and Deutsche Bank now forecasting a mild downturn in 2023. A recession could even begin by December 2022.
Even without a recession, Morgan Stanley is confident stocks have 10% lower to fall. If we get a mild recession, stocks could fall 25% more, and in a severe recession, 35%.
Fortunately, high-yield defensive dividend aristocrats like these 11 blue-chips are potentially wonderful low volatility options that can help weather the recession.
They yield a very safe 4.1%, are 20% historically undervalued, and analysts expect long-term returns of 11.0%, just as they’ve delivered over the last 26 years.
These defensive high-yield aristocrats fell just 31% in the Great Recession, 12% in the Pandemic, and are down 7% in 2022, 67% less than the S&P 500 and 60% less than a 60/40.
Combining them with 33% long US treasuries cuts the peak decline in severe bear markets in half, including just a 1.6% decline in 2008 and a 6% decline during the Pandemic.
Or, to put it another way, these 11 high-yield aristocrats could be just what you need to sleep well at night in the coming recession.