A Trio of Defensive Stocks for the Value Investor

These businesses could enhance the resilience of your portfolio

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Feb 28, 2022
Summary
  • Kroger, Flowers Foods and Lancaster Colony have continued to generate earnings and dividends during economic recessions.
  • They offer compelling trailing dividend yield ratios compared to the S&P 500.
  • Wall Street sell-side analysts have issued positive recommendations for these stocks.
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If you want to make your portfolio more resilient to recessions, the following defensive stocks may be suitable options. These businesses have continued to generate earnings and dividends during economic recessions as they offer goods and services on which people do not typically cut their spending, even in times of financial distress.

Furthermore, as of the time of writing, these stocks offer compelling trailing dividend yield ratios compared to the S&P 500's 1.38%, and Wall Street sell-side analysts have issued positive recommendations for them.

Kroger

The first stock investors could be interested in is The Kroger Co. (

KR, Financial), a Cincinnati, Ohio-based grocery store chain accounting for 2,742 retail food shops across 35 states in the U.S. and the District of Columbia. The company also sells fuel through 1,596 fuel centers and operates an online retail store.

Over the past five years, the trailing 12-month diluted earnings per share from continuing operations ($1.33 as of the fiscal quarter ended on Oct. 31, 2021) increased by 8.60% on average every year. The trailing 12-month dividend per share (78 cents on Dec. 1, 2021, when the last quarterly distribution was made) has grown 11% annually over the same period.

GuruFocus assigned a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10 to the company.

The share price closed at $46.46 on Friday for a market capitalization of $34.16 billion, a price-earnings ratio of 34.93 and a trailing 12-month dividend yield of 1.68%.

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On Wall Street, the stock has a median recommendation rating of hold with an average target price of $45.84 per share.

Flowers Foods

The second stock investors could be interested in is Flowers Foods Inc. (

FLO, Financial), a Thomasville, Georgia-based packaged bakery products producer and marketer. In addition to 46 bakeries that the company operates itself, the rest of the sales system relies on a branch and warehouse delivery system.

Over the past five years, the trailing 12-month diluted earnings per share from continuing operations (96 cents as of the December 2021 quarter) has increased by 3.40% on average every year. The trailing 12-month dividend per share (83 cents on Dec. 17, 2021, when the last quarterly distribution was made) has grown 5.8% annually.

GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 7 out of 10 to the company.

The stock traded at $27.81 at close on Friday for a market capitalization of $5.88 billion, a price-earnings ratio of 28.97 and a trailing 12-month dividend yield of 2.98%.

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On Wall Street, the stock has a median recommendation rating of hold with an average target price of $29 per share.

Lancaster Colony

The third stock investors could be interested in is Lancaster Colony Corp. (

LANC, Financial), a Westerville, Ohio-based manufacturer and marketer of specialty food products for U.S. retail and foodservice markets.

Over the past five years, the trailing 12-month diluted earnings per share from continuing operations ($4.56 as of the December 2021 quarter) has increased by 4% on average every year. The trailing 12-month dividend per share ($3.05 on Dec. 31, 2021, when the last quarterly distribution was made) has grown 8.5% annually.

GuruFocus assigned a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10 to the company.

The stock traded at $168.09 at close on Friday for a market capitalization of $4.63 billion, a price-earnings ratio of 36.86 and a trailing 12-month dividend yield of 1.81%.

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On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $170 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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