3 Blue-Chip Stocks Investors Should Own in a Market Crash

August 23, 2021

For investors, the past 15 months or so in the US stock market has been a particularly rewarding period.

That’s because, after an initial 30% sell-off on news of the Covid-19 pandemic in February to March 2020, the benchmark US stock indices are once more at all-time highs.

The S&P 500, for example, is up 93% since it bottomed in late March 2020. The tech-heavy Nasdaq? That’s roared back by 115% since its March 2020 low.

Understandably, the massive stock market rally has investors questioning when the next market crash is coming.

While there’s little point to speculating when that “correction” might be (remember, we shouldn’t try to time the market), it’s still worth having some bedrock stocks in our portfolio to balance out the more volatile growth names.

Typically, these more stable stocks come with a decent dividend – that’s also hopefully growing at a reasonable clip no matter what the market situation.

With that in mind, here are three blue-chip stocks – which are all S&P 500 constituent stocks – that investors should own whenever the next market crash comes about.

1. Proctor & Gamble

All of us have most likely purchased essential everyday items sold by consumer goods giant Proctor & Gamble Co (NYSE: PG).

Its stable of brands include some highly recognisable names, including Tide detergent, Pampers, Gillette, Oral-B and Febreze.

Its latest Q4 FY 2021 quarterly earnings (for the three months ended 30 June 2021) saw net sales up 7% year-on-year to US$18.9 billion and diluted earnings per share (EPS) of US$1.13, up 6% year-on-year.

What comes as no shock is that P&G is highly cash generative with operating cash flow in its latest quarter standing at an impressive US$4.1 billion.

Earlier this year, it also raised its quarterly dividend per share (DPS) by 10% to US$0.87. Over the past 10 years, P&G has hiked its full-year DPS from US$1.97 in FY 2011 to US$3.24 in FY 2021.

That equates to a compound annual growth rate (CAGR) of 5.1% in its dividend over the period, easily beating inflation.

With a yield of 2.4% right now, P&G shares offer investors the safety of an everyday consumer goods company.

2. NextEra Energy

In the renewable energy space, there’s no more reputable name than NextEra Energy Inc (NYSE: NEE). The world’s largest generator of renewable energy is a market leader in the space.

According to the US Energy Information Administration (EIA), renewable energy was the only source of power generation that actually increased in 2020 as overall energy consumption actually fell last year.

NextEra is primarily positioned to benefit from the “decarbonisation” of the US economy. The firm owns Florida Power & Light (FPL), one of the country’s largest utilities.

This allows the NextEra to generate reliable income streams while continuously reinvesting in renewable energy projects that it finds attractive on a longer-term basis.

The firm has an extremely impressive track record with adjusted EPS having grown at a CAGR of 8.7% since 2005 while its DPS has seen an even stronger CAGR of 9.6% over the past 15 years up to 2020.

With a market cap of nearly US$170 billion, and with shares yielding 1.8%, NextEra Energy is one stock that investors will want to own no matter what the market is doing.

3. Walmart

This list of rock-solid stocks wouldn’t be complete without the world’s largest retailer, Walmart Inc (NYSE: WMT).

Walmart continued to see strong demand across its channels in the company’s latest second-quarter 2021 results.

Total revenue for the quarter hit US$141 billion, up 2.4% year-on-year. Meanwhile, Walmart US expanded its market share in the grocery sector as comparable transactions increased 6.1% year-on-year.

Walmart also has a strong membership base, which filtered through in its latest numbers. Sam’s Club – a similar scheme to a Costco Wholesale Corporation (NASDAQ: COST) membership – saw its comparable sales increase 7.7%.

Meanwhile, Sam’s Club membership income increased 12.2% as renewal rates increased across the board and membership count hit an all-time high.

Walmart’s investment in omnichannel retailing has paid off as the company has managed to excel during the Covid-19 pandemic.

With a dividend yield of 1.5%, Walmart shares are yielding relatively lower but its investments in e-commerce should reward investors in future.

Portfolio buffers

For all long-term investors, it’s always worth some portfolio stocks that provide ballast from any potential volatility in stock markets.

With Procter & Gamble, NextEra Energy and Walmart, investors have three stocks that should provide some level of security – in terms of the strength of their businesses – in any widespread market sell-off.


Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of NextEra Energy Inc.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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