Looking for bear market stocks to own? Indeed, experiencing a market crash during your lifetime is a gut-wrenching experience. Seeing your portfolio tank can give anyone considerable stress and sleepless nights. That’s why I always advocate for a diverse and defensive portfolio to help weather market downturns.
Many examples of defensive stocks operate in industries essential to our daily lives, which puts them in a position to continue despite the state of the economy. They also have predictable cash flow and potential dividend income.
Today, we will look at three companies investors should consider to protect their portfolios during market crashes. To get the list, I screened the market using these categories:
- Annual dividend yield of more than 3%,
- Above $1 billion market cap,
- Trailing twelve-month Return on Equity (ROE) of more than 10%.
Return on equity is a metric I like to use to consider how efficiently a company generates profits for its shareholders. 10% is a reasonable starting point when looking for good companies. I then sorted the list based on dividend yield and presented the top three from highest yields to lowest.
Suburban Propane Partners (SPH)
A major supplier to American home heating and energy needs, Suburban Propane Partners (NYSE:SPH) distributes propane, energy products, and low-carbon fuel alternatives. The company operates in three main segments:
- Propane: provides retail distribution of propane to various clients.
- Natural gas and electricity: markets electricity and natural gas to various clients in New York and Pennsylvania.
- Fuel oil and refined fuels: retail distribution of fuel oil, gasoline, diesel, and kerosene.
- All other: runs the company’s service business.
The company recently announced a $0.325 quarterly dividend per share, $1.30 annually, translating to an approximate 6.8% annual dividend yield.
Suburban Propane’s 2024 Q2 results were headlined by a net income increase from $104.5 million to $111.5 million YOY. This growth came despite the warm weather’s impact on the demand for heating-related products, a good indicator of the company’s ability to generate income regardless of conditions.
The company’s impressive ROE of 17.56% makes it a strong contender as one of the bear market stocks to own in any investor’s portfolio.
Brookfield Infrastructure Corporation (BIPC)
Next on my list of bear market stocks to own is the world’s largest fleet of containers used in global intermodal logistics operations. Brookfield Infrastructure Corporation (NYSE:BIPC) owns and operates infrastructure networks that help move critical resources globally.
The company’s assets help move freight, water, and energy globally. Brookfield Infrastructure also has interests in natural gas businesses and operations for gas transmissions, mainly in Brazil.
Brookfield recently announced a 6% increase in dividend distribution to $0.405 per unit. This results in a $1.62 forward annual rate, translating to a 4.55% yield.
With its stable business model, Brookfield Infrastructure delivered robust financial results. Net income for Q1 2024 surged to $170 million, an almost 640% increase compared to Q1 2023’s $23 million.
The surge in net income is fueled by organic growth and new investments. Brookfield Infrastructure’s selective approach to its investments, such as the Brazilian rail provider acquisition and telecom tower portfolio in India, showcases its ability to utilize its resources efficiently.
Due to this tremendous growth, ROE reached 88%. So, if you are looking for stocks to slowly build your portfolio’s defense, BIPC stock is an option.
Brookfield Renewable Corp (BEPC)
Like the earlier entry, Brookfield Renewable Corp (NYSE:BEPC) is part of Brookfield Corporation (NYSE:BN) and focuses on renewable power platforms such as hydroelectric, wind, and solar energy.
The company holds around 134,400 megawatts of development pipeline and around 33,000 megawatts of installed capacity.
Brookfield Renewable Corp currently pays a forward dividend rate of $1.42 based on a $0.355 quarterly payout. This reflects a 4.39% yield.
While Q1 2024’s results were mixed, the company reported an 8% increase in funds from operations. This has brought it closer to its 10% FFO growth for the year.
In addition, the company highlighted its strong partnership with Microsoft, which will help deliver around 10.5 GW of renewable energy capacity between 2026 and 2030 in Europe and the U.S. This is a key milestone for the company as it would help meet the growing demand for renewable energy, especially in supporting data center development and AI-powered cloud services.
With its attractive ROE of 10.84%, a decent dividend yield, and great growth prospects, BEPC stock should be added to your watchlist.
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.