As the saying goes, premium businesses frequently command premium valuations. Some of the best stocks over time have proven to be those whose products are purchased regardless of the economic climate. In times like these, when the market keeps climbing to new highs and bargain stocks are few and far between, it pays to seek safety. While there aren’t many stocks out there that can be called screaming bargains, there are a few of America’s best businesses that should be owned regardless of the prevailing economy.
Dow component McDonald’s Corporation (NYSE:MCD) is a pillar of stability. In fact, McDonald’s Corporation (NYSE:MCD) was one of only two stocks in the Dow Jones Industrial Average to post positive returns in 2008, in what was a terrible year for the broader market.
In January, McDonald’s reported great full-year 2012 results. Global comparable sales increased 3.1%, and consolidated revenues climbed 5% on a constant currency basis. Diluted earnings per share increased 5% as well on a constant currency basis to $5.36 per share.
Furthermore, the company’s future is bright. McDonald’s Corporation (NYSE:MCD) has set ambitious goals for international expansion. McDonald’s is executing on its plan to open 225 to 250 new restaurants every year in China until it reaches its stated goal of 2,000 restaurants there by the end of 2013. Moreover, the company has now targeted growth through an additional member nation of the BRIC countries: Russia. McDonald’s Corporation (NYSE:MCD) has 357 restaurants in more than 85 Russian cities, with plans to open at least 150 self-operated restaurants in Russia over the next three years.
Fellow Dow member The Procter & Gamble Company (NYSE:PG) directs investors’ collective attention to its 50 ‘Leadership Brands,’ meaning the 50 products that comprise 90% of the company’s revenues and more than 90% of its profits. Twetny-five of these brands are billion-dollar brands, each generating at least $1 billion in annual sales. Its flagship brands can be found in virtually every aisle in the local grocery store. P&G announced fiscal 2012 sales of just north of $83 billion, an increase in total revenues of more than 3% year over year.
Last but not least, PepsiCo, Inc. (NYSE:PEP) has a long list of brands that appeal to consumers, including its namesake soft drinks. The company has taken measurable steps to diversify its product portfolio, with additions including Quaker Oats and Lays. PepsiCo, Inc. (NYSE:PEP) is much more than just a soda company. To that end, the company’s revenue is evenly split between food and beverages. In total, Pepsi has 22 brands that each brings in at least $1 billion in annual sales.
A Shareholder’s Best Friends
Even better, McDonald’s Corporation (NYSE:MCD), Procter & Gamble, and PepsiCo, Inc. (NYSE:PEP) are some of the most shareholder-friendly companies in existence. Last year, McDonald’s Corporation (NYSE:MCD) returned $5.5 billion to shareholders in the form of dividends and share buybacks. The company increased its dividend 10%, and will surely do so again in the fall.
In fiscal 2012 Procter & Gamble returned $10 billion to shareholders through dividends and buybacks. The company is the gold standard for dividend payers—in fiscal 2012, the company paid a dividend for the 122nd year in a row. That kind of track record places Procter & Gamble in elite company. Only eight other U.S.-based companies have paid dividends to shareholders for as long. In addition, P&G increased its dividend for the 56th year in a row.
Earlier this year, PepsiCo, Inc. (NYSE:PEP) announced a new $10 billion share buyback program, to be completed over the next three years. The company also announced a 5.6% increase in its annualized dividend. Under these programs, the company expects to return a total of $6.4 billion to shareholders in 2013 through dividends and share buybacks.
When it comes to these stocks, you don’t have to worry about their businesses vanishing because of economic calamity in Europe or some geopolitical event. In addition, each of these companies has a long history of providing hefty dividends and buybacks to shareholders, adding yet another layer of safety to protect your portfolio against a falling market. These stocks will help secure your financial future and allow you to sleep well at night for many years to come.
The article Great Stocks for Both Bull and Bear Markets originally appeared on Fool.com and is written by Robert Ciura.
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