June brought drama on Wall Street. While the summer is thought of as the sleepiest time of the year for stocks, a mid-year shock to share prices had a deep impact on what the best stocks to buy for July should look like.
The tit-for-tat trade conflict with China worsened in June, as the White House planned restrictions on Chinese investment in U.S. tech firms as well as the exporting of U.S. technology to its largest trading partner.
[See: 7 of the Best Dividend Stocks to Buy for 2018.]
In a few short weeks, the Dow lost over 1,000 points, the S&P 500 lost over 2 percent and the Nasdaq stumbled by 3 percent.
Despite a strong fundamental economy, go-go momentum stocks look disproportionately exposed to further losses should summertime volatility continue. The risk of escalating trade tiffs in particular calls for caution, and a heavier-than-usual emphasis on tried and true companies with recession-resistant businesses.
With that in mind, here’s a look at 5 of the best stocks to buy for July.
Johnson & Johnson (NYSE: JNJ)
One of Wall Street’s biggest and most reliable blue-chip stocks, JNJ is a classic Rip van Winkle business. You can buy it, go to sleep for 20 years, and emerge from your slumber with not only your principal intact but, in all likelihood, some respectable capital gains to boot.
Johnson & Johnson is a perfect stock to buy for defensive investors, boasting diversified and reliable businesses in consumer goods, pharmaceuticals and medical devices. Sales should top $80 billion this year.
Shares pay a solid 2.9 percent dividend, and on June 25, the day the market plunged on news of the U.S.-China tech investment restrictions, JNJ was off a paltry 0.2 percent — one-seventh the magnitude of the S&P 500’s loss and less than one-tenth of what the Nasdaq gave up.
Dollar General Corp. (DG)
While Johnson & Johnson makes everything from Band-Aids to Sudafed, Dollar General also concerns itself with everyday essentials, operating a chain of discount variety stores.
Strategically located in more rural areas than its rival Dollar Tree ( DLTR), Dollar General has a loyal base of cost-conscious customers looking for simple, cheap everyday items in one easily navigable store.
The great thing about essentials — cereal, baby food, toilet paper, toothpaste, and so on — is that they’re darn close to being recession-proof. DG revenue has growth at a 6 to 8 percent annual clip over the last five years, and analysts expect 8 percent top-line growth again in 2018.
Meanwhile, a 1.2 percent dividend pays you to stick around. This combo of income and safety makes DG one of the best stocks to buy for July.
Flowers Foods (FLO)
Flowers Foods is literally a bread maker. Every time you buy bread under the Nature’s Own or Wonder brands, there’s a FLO shareholder, somewhere, smiling.
Noticing a theme here? Obviously selling sliced bread isn’t the most innovative business model in the world, but it’s steady and predictable, especially with brand names like Wonder bread.
[See: 9 Best Cheap Stocks to Buy Now Under $5.]
Though FLO is not a growth stock, it’s shown a tendency to grow in horrendous bear markets; in 2001 shares nearly doubled and in 2008 the stock added 9 percent.
Shares have been resilient in more recent trying times too, making Flowers Foods one of the best stocks to buy for July. For example, in February 2018, when markets plunged following an extended Trump-inspired bull market, FLO shares did it again: The S&P 500 fell 3.9 percent while FLO jumped 5.8 percent.
That’s a 9.7 percent outperformance in a single month. There’s no guarantee FLO will outperform that dramatically next time the market takes a turn for the worse, but FLO and its 3.5 percent dividend should you peace of mind (and, of course, some proverbial bread as well).
Duke Energy Corp. (DUK)
One of the few sectors that tends to outperform in times of uncertainty or recession is utilities. Duke Energy is a $55 billion electric utility — the second largest publicly traded one in the U.S. — and is also one of the best stocks to buy for the summer.
Utilities, Duke included, are tightly regulated by the government in order to protect consumers from price-gouging on basic goods and services. Still though, the government has to allow for some profit margins and occasional price hikes in order to incentivize companies like DUK to operate in the first place.
DUK boasts a net profit margin of 12.4 percent, nearly twice Dollar General’s (6.8 percent) and more than triple Flowers Food’s (3.6 percent) net margins.
If you’re not going for high-risk, high-reward home runs in your portfolio and instead you want some steady Eddies you can rely upon, it doesn’t get much better than government-guaranteed profits.
Shareholders have been treated well in the 2010s, with shares up 122 percent over the last 8 years, including dividends. Speaking of dividends, DUK boasts a big one: 4.5 percent.
Apple (AAPL)
Last but not least: the largest company in the world.
Apple may not be a classically defensive name like the ones above, but you always want a diversified portfolio, and if conservative stocks underperform, AAPL should provide a dose of upside as a leader in the growth-happy tech industry.
Frankly, Apple has some singular advantages that should ensure it remains one of the best stocks to buy for years to come. An elite brand, an addicting and intertwined ecosystem of products, a 1.6 percent dividend and a cash hoard that would make most countries jealous ($267 billion) all speak to its safety and long-term staying power.
[See: 52 Dividend Stocks Boasting 25-Year Dividend Growth.]
With iPhone revenue of $141 billion in fiscal 2017 anchoring the business, Apple’s growth will likely come from its peripheral segments like services and accessories. Its wearables business alone — which encompasses the likes of Apple Watch, AirPods and Beats products — is now the size of a Fortune 300 company.
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5 of the Best Stocks to Buy for July originally appeared on usnews.com
