"Dividend aristocrats" have historically performed well during recessions. The Standard & Poor's Dividend Aristocrats index was down only 21.88% in 2008. For comparison, the S&P 500 index was down 37% in the same period. The Dividend Aristocrat index is made up of stocks with 25 or more years of consecutive dividend increases. Stocks with a long history of dividend increases tend to have strong, stable cash flows and a history that shows they can weather economic downturns.
Not all Dividend Aristocrats are created equally. Some handle recessions much better than others. McDonald's (MCD_) had the lowest overall maximum drawdown, at -21.65%. McDonald's was also the only Dividend Aristocrat to post positive returns in 2007, 2008, and 2009. Top 5 Recession Proof Dividend Aristocrats: Wal-Mart (WMT), McDonald's (MCD), Exxon Mobil (XOM), Becton Dickinson (BDX) and Kimberly-Clark (KMB).
Source: The Street
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