When times get tough, equity investors often flock to defensive stocks. This is traditionally food and water, utilities, consumer products, tobacco, beer and booze, and other things that people have to have. In the case of the Brexit, there are many companies which are defensive but their exposure to Britain and the European economies is large enough that some just are not acting defensive at all.
24/7 Wall St. identified 8 all-American companies that could care less about the Brexit on Friday. There is some overlap here, but these are 7 stocks rallying into the post-Brexit news from Friday and Money. What is interesting here is that some of the higher-yield dividends in the specialty real estates investment trust (REIT) segment are rising as well. These are not all only defensive stocks, but most have only US exposure and the notion that rates will stay lower for longer is helping their case.
We have included dividend yield, price action and color on each of the 8 companies. There are of course dozens which might fit the bill. We specifically did not cover the gold mining stocks, but many of those were higher and you can see how much the top gold stocks were up on Friday. While this is a mixed bag of stocks, the reality is that most of these would pass suitability tests for nearly all but the most conservative investors.
Maybe you have heard that there is always a bull market somewhere. It was at least true on Monday, despite the Dow being down 260 points (-1.5%) and the S&P being down 36 points (-1.8%).
Altria Group, Inc. (NYSE: MO) is rising because it is now U.S.-focused for tobacco and related products. Its international segment was spun out long ago. So what if the company is slowly killing off its customers (or should we say subscribers?). How many people in the U.S. will stop smoking or using tobacco just because of Brexit? None, at least not because of that. Altria’s price target was even raised to $71 from $65 at Stifel. This was at $66.31 on Thursday, and rose to $67.58 on Friday and shares were at $67.57 on Monday. Its dividend yield is now under 3.4%.
American Electric Power Co., Inc. (NYSE: AEP) was trading at close to $66.50 on Thursday and shares rose as high as over $68.00 on Monday. Its power generation and electric utility exposure covers 5.4 million customers in 11 states. Due to rising share prices, AEP’s dividend yield is down to about 3.3%.
American Water Works Company, Inc. (NYSE: AWK) is the largest public and independent chain of water utilities in America. It has some Canada exposure, but it covers millions of Americans. If anyone can describe how the Brexit news is going to impact your daily water use here please try to sell that explanation. Oh, shares hit a new all-time high of $81.51. American Water Works has a low yield of 1.7% but that is because it is super defensive and investors are paying a major premium to own water assets.
Dollar General Corp. (NYSE: DG) is effectively all U.S.-based retail in the “dollar on up” theme. They are reaching up, and a stronger dollar helps them buy more goods on the cheap that it can sell in the sub-$10 retail category. Dollar General shares were at $92.50 on Monday after going north of $93.00 on Friday. Shares were closer to $91.50 on Thursday ahead of the Brexit vote. Dollar General is new to the dividend game, but its 1.1% dividend yield has ample room to grow in the years ahead.
Government Properties Income Trust (NYSE: GOV) is winning as a REIT which caters mostly to federal, state and local government and quasi-governmental agencies. They don’t bust their leases too often, and they tend to remain where they are for years and years. A week ago this was at $20.50, but after a down gap on Friday it is up at $21.40 — and it still has an 8% dividend yield. You can loan Uncle Sam money in Treasury notes at less than 1.5% for a decade, or you can make 8% by playing the government’s landlord.
Healthcare Realty Trust Inc. (NYSE: HR) rose 20-cents to $33.82 on Friday and was up another $0.44 ( up 1.3%) at $34.26 on Monday. This yield is only about 3.5% but the REIT’s share price hit a 52-week on Monday as well. It is diversified within operating and owning healthcare services properties. Will people in the U.S. need less healthcare because of Brexit?
Hormel Foods Corporation (NYSE: HRL) has a lot more to offer than Spam canned meat, but its food exposure makes it defensive due to nothing being priced very high. And, of course you have heard “you gotta eat no matter what” in hard times. Hormel shares were at $34.50 right before the Brexit news, and despite gapping down on Friday the stock was up on Friday and Monday. It was at $35.75 on Monday, and the yield here is barely 1.6%.
Senior Housing Properties Trust (NYSE: SNH) hit a 52-week high of $20.40 on Monday, and it still yields 7.7% at that price. This REIT out-yields most senior housing REITs but that is because they have diversified into other medical-oriented facilities in recent years. Senior Housing Properties was under $20.00 just last week and was under $19.00 at the start of June.