Things You'll Need:
- Time
- Computer
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Step 1
The first step is to look for large cap companies that are undervalued due to the downturn in the economy. These stocks generally have dropped in price anywhere from 15 - 50% from their peak price. Companies who's product lines or services are in consumer staples, healthcare, or pharmaceuticals are generally great selections for recession proofing your portfolio.
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Step 2
Next, check to make sure the companies you are researching are retaining their dividend yield. This is key, since the stock price has declined, the dividend yield will increase. Check financial news and key statistics to make sure the company is not planning to reduce the dividend yield in the near term. Since the stock price has dropped significantly due to the economy, the dividend on these types of stocks is generally high. You should look for companies with greater than 4% dividend yields, which will be higher than most savings accounts.
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Step 3
Finally, make sure to diversify your portfolio. Do not select stocks all from the same sector, as this will put your portfolio at more risk if a particular industry gets hit extremely hard from harsh economic times. Sit back, relax, and receive those dividends each quarter until the economy and stock market improve. Once the economy does start to turn positive, these type of recession proof stocks are most likely the first ones to start moving up towards their pre-recession price points.
Comments
TheMoreYouKnow said
on 1/28/2009 If you have the money to spend, now is the time to invest. Thanks for sharing the "how to" part of stock investment. 5ive *tars.