Could 2023 Be Another Rocky Year?
This is the question on many investors’ minds as we head toward the final days of a very forgettable 2022. With a looming recession in 2023 and inflation still not anywhere near the Fed’s target rate, it seems like it could be another rough year ahead for investors. While growth stocks are trading at multi-year lows, it could be a while until we see them return to their previous trajectories.
One strategy to weather the volatility in the markets is to rotate back to reliable blue-chip stocks. Some of you might find this boring and that’s okay! Everyone can have their own investing style. At the end of the day, the most important part of investing is generating and defending your wealth. Personally, I like to hold a balance of growth and value stocks that pay good dividends. Here are two I’m looking to add as we head into what could be another frustrating year for stocks.
Merck & Co. Inc. (NYSE: MRK)
This might not be a household name but some of its prescription medications certainly are. Merck was originally a German company with roots that can be traced all the way back to 1668! It is one of the world’s most dominant pharmaceutical names with some of the most widely used prescription drugs under its umbrella. Remember that prescription drugs are a global industry and not just an American one!
Part of the reason why I like Merck is that prescription medications are recession-proof. Unfortunately, no matter how high inflation and prices get, patients need prescription medications to live. It’s part of the reason why Merck has been the second-best performing stock in the Dow Jones Industrial Average in 2022 behind only Chevron (NYSE: CVX). Leading the charge for Merck is its flagship product Keytruda, a drug that is one of the leading treatments for various forms of cancer. It also produces the Diabetes-drug Januvia and the HPV treatment Gardasil. In an environment where many companies are struggling, Merck just reported about $15 billion in quarterly revenue which was a nearly 14% year-over-year growth. Combined with the 2.63% dividend yield and it is easy to see why Merck is at the top of my list for blue-chip stocks in 2023.
Johnson & Johnson (NYSE: JNJ)
While we’re on the topic of pharmaceutical giants, perhaps no stock is as recession-proof as Johnson & Johnson. The pharmaceutical and consumer healthcare behemoth is one of the world’s largest companies. It has also well outperformed both the S&P 500 and the Dow Jones Industrial Average this year.
Like with Merck, people need prescription medications and health care products. I know the stock market has given me a headache this year so I’ve been consuming plenty of JNJ’s products. These include brands like Tylenol, Motrin, Pepcid AC, Sudafed, Imodium, Nicorette, Band-Aid, Listerine, Polysporin, Aveeno, Neutrogena, and Lubriderm. Chances are you’ve been using some of its products on a daily basis!
The other part about JNJ’s stock? It comes with a high floor because of the stock’s legendary dividend. Johnson & Johnson is a Dividend King as it has raised its dividend each year for more than 60 consecutive years. This includes this year’s dividend raise of 6.6% even as the company faces one of the most challenging economic environments in more than a decade. Johnson & Johnson might be the definition of a blue-chip stock and it is worth adding to your portfolio to protect you against the rough waters ahead in 2023.
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