6 Recession-Proof Stocks Every Investor Should Know

When economic uncertainty strikes, stock markets tend to fluctuate wildly. Many investors panic, pulling money out of growth-driven companies that may not hold up in a downturn. But there are certain stocks, often referred to as recession-proof stocks, that provide stability even when the broader economy falters.

In this blog, we’ll define what makes a stock recession-proof and highlight six companies that historically perform well during challenging times.

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What Are Recession-Proof Stocks?

Recession-proof stocks belong to companies that provide essential goods and services people can’t live without, regardless of economic conditions. Even when consumer spending tightens, people still buy food, pay utility bills, and purchase healthcare products.

These companies often share a few key traits:

• Strong cash flow – Reliable revenue from everyday needs.

• Low elasticity of demand – Products people must buy, even during financial strain.

• Stable dividends – Consistent payouts that attract long-term investors.

Essentially, they are the financial “safe havens” that help protect portfolios from the worst effects of a downturn.

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6 Recession-Proof Stocks to Watch

1. Procter & Gamble (PG)

A household name in consumer staples, Procter & Gamble owns brands like Tide, Pampers, and Gillette. During recessions, families may cut luxuries, but they still need laundry detergent, diapers, and personal care products. PG’s diversified portfolio of everyday essentials makes it a reliable performer.

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2. Johnson & Johnson (JNJ)

Healthcare is one of the most recession-resistant sectors, and J&J is a powerhouse in pharmaceuticals, medical devices, and consumer health products. Demand for medicine and healthcare products rarely falls, ensuring stability for investors.

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3. Coca-Cola (KO)

No matter the economic cycle, people continue to buy beverages like Coca-Cola, Sprite, and bottled water. With a global reach and a long track record of paying dividends, KO has been a go-to defensive stock for decades.

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4. Walmart (WMT)

As one of the largest retailers in the world, Walmart benefits during recessions as consumers trade down from higher-priced stores. Its “everyday low prices” strategy positions it well when households look to stretch their budgets.

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5. McDonald’s (MCD)

Fast food tends to thrive during downturns, as people cut back on dining at upscale restaurants but still want affordable meals out. McDonald’s global presence, recognizable brand, and consistent customer demand make it a defensive play.

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6. Duke Energy (DUK)

Utilities are essential—people pay their electric bills even in tough times. Duke Energy, one of the largest utility companies in the U.S., provides investors with steady cash flow and reliable dividends, making it a solid recession-proof choice.

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Final Thoughts

While no stock is 100% immune to economic downturns, companies that sell essentials—food, energy, healthcare, and basic consumer goods—tend to weather recessions better than others. Adding recession-proof stocks like Procter & Gamble, Johnson & Johnson, Coca-Cola, Walmart, McDonald’s, and Duke Energy to your portfolio can provide a defensive layer and peace of mind when markets turn volatile.

Remember: a well-diversified portfolio is the best defense against uncertainty. Recession-proof stocks are not about chasing big returns, but about protecting wealth and ensuring stability during unpredictable times.

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Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Paperback $10.99.

Here's 5 of the Highest Monthly Dividend Stocks Right Now

 

For income-focused investors, few things are more exciting than stocks that pay dividends every single month. Unlike traditional dividend payers that distribute earnings quarterly, monthly dividend stocks provide a steady stream of cash flow that feels more like a paycheck. This predictable income can be especially appealing to retirees, side-income seekers, or anyone who wants consistent cash to reinvest and compound more quickly.

But here’s the catch: while some monthly dividend stocks offer eye-popping yields—sometimes 15% or even 20%—not all of them are created equal. Many of the highest-yielding names originate from sectors such as real estate investment trusts (REITs) and business development companies (BDCs), where income potential is substantial, but so are the associated risks. That’s why knowing which stocks truly deliver reliable monthly income—and which ones may be dividend traps—is critical for building a sustainable income strategy.

In this blog, we’ll explore the stocks paying the highest monthly dividends right now, what makes them attractive, and the risks you need to understand before chasing those headline-grabbing yields.

What is the meaning of a 20% yield on a Monthly Dividend Stock?

The timeframe of the dividend yield is critical because it always refers to annualized income, even if the stock pays monthly. Let’s break it down:

Dividend Yield Is Always Annual

When you see a “20% dividend yield,” it always refers to the annual rate, regardless of whether the company pays dividends once a year, quarterly, or monthly.

• If a stock pays $2 per year in dividends and trades at $10, the yield is 20% annually.

• How that $2 gets delivered (monthly, quarterly, or annually) doesn’t change the yield—it just spreads out the payments differently.

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Monthly vs. Annual Payments

• Annual Dividend (Paid Once Per Year)

  • The company might pay the entire $2 once a year.

  • Example: Every December, you get one large dividend.

  • Annual yield: Still 20% if the stock is $10.

• Quarterly Dividend (Most Common in the U.S.)

  • The $2 annual dividend is split into four payments of $0.50.

  • You receive one every 3 months.

  • Annual yield: Still 20%.

• Monthly Dividend (More Common with REITs & BDCs)

  • The $2 annual dividend is divided into 12 payments of about $0.1667 each.

  • You receive one every month.

  • Annual yield: Still 20%.

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The Key Difference for Investors

• Annual Yield (20%) → Always the considerable picture number, the benchmark for comparing stocks.

• Payment Frequency (Monthly vs. Quarterly vs. Annually) → Impacts cash flow timing, not yield.

  • Monthly payers give investors quicker access to income and smoother reinvestment opportunities.

  • Annual payers require you to pay the whole amount at once.

Here’s a blog-style deep dive into the highest-yield monthly dividend–paying stocks as of mid-2025, with up-to-date information and market context to guide your income-focused strategy:

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Monthly Dividend Stock Champions of 2025

Top Yields That Stand Out

From multiple recent sources, the top monthly dividend stocks by yield include:

1. Armour Residential REIT (ARR) — Around 17–20% yield and pays monthly. (stockbridge-capital.co.uk, NerdWallet, Sure Dividend, monthlydividendpayingstocks.com)

2. Orchid Island Capital (ORC) — Near 17–18% yield, also monthly. (stockbridge-capital.co.uk, Sure Dividend)

3. Ellington Credit Co. (EARN) — At the top of several 2025 lists with a ~16.7% yield. (Sure Dividend)

4. Dynex Capital (DX) — About 16% yield, makes a monthly payout. (Young and the Invested, Sure Dividend)

5. AGNC Investment Corp. (AGNC) — Yields between 14–16%, monthly. (Blendspace, Bankrate, Young and the Invested, Sure Dividend)

These names consistently rank at the top across different expert lists for their standout monthly yields.

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More of the Monthly Payers You Should Know

Beyond the highest yields, other reliable monthly payers include:

• Arbor Realty Trust — ~12.6% yield, a diversified mortgage REIT. (WikiJob)

• Ares Capital (ARCC) — A business development company (BDC) with around a 10–10.1% yield and a solid payout history.(WikiJob, Kiplinger)

• PennantPark Floating Rate Capital (PFLT) — Around 8.8–11.5% yield, has raised its dividend consistently since 2011. (Investment U, Blendspace)

• Ellington Financial (EFC) — ~11–12% yield, another mortgage-backed securities play.(Investment U, Blendspace)

• Gladstone Capital (GLAD) — ~7.2% yield, well-regulated monthly net. (Investment U)

• Main Street Capital (MAIN) — ~6–6.0% yield, with consistent monthly growth. (Investment U, Kiplinger)

• Realty Income (O) — Known as “The Monthly Dividend Company,” yielding ~5–6% and with decades of history. (NerdWallet, monthlydividendpayingstocks.com, The Motley Fool, Wikipedia)

• EPR Properties (EPR) — Historically ~6.9–7.3% yield, focused on entertainment real estate.(NerdWallet, Investopedia)

• LTC Properties (LTC) and STAG Industrial (STAG) — Healthcare and industrial REITs, ~6.7% and ~3.9% yield, respectively. (Investopedia)

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What’s Driving These High Monthly Yields?

Most of these companies fall into mortgage REITs (mREITs), BDCs, or special-purpose REITs. Some pay extremely high yields, but that often comes with elevated risk:

• Volatility & Dividend Cuts: mREITs like ARR, AGNC, and DX are sensitive to rising interest rates and economic cycles—dividend cuts are not uncommon. (Young and the Invested, Blendspace)

• Business-cycle Sensitivity: BDCs like ARCC and MAIN hinge on middle-market health and can be vulnerable during downturns.(Kiplinger, Investment U)

• Sustainability vs. Yield: Realty Income and Main Street Capital offer lower yields but with more stable, growth-oriented records. (The Motley Fool, Investment U, Wikipedia)

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Quick Yield Comparison Table (Approximate ranges)

Ticker / Name	Monthly Yield	Notes
ARR – Armour Residential REIT	17–20%	High yield, high risk
ORC – Orchid Island Capital	17–18%	Very high yield
EARN – Ellington Credit Co.	~16.7%	Top yield in 2025 lists
DX – Dynex Capital	~16%	High yield, history of cuts
AGNC – AGNC Investment Corp.	14–16%	Large, agency mREIT
Arbor Realty Trust	~12.6%	More diversified REIT
EFC – Ellington Financial	~11–12%	mREIT with steady payouts
PFLT – PennantPark Floating…	~8.8–11.5%	Consistent increases since 2011
ARCC – Ares Capital (BDC)	~10%	Established BDC, diverse portfolio
GLAD – Gladstone Capital	~7.2%	Lower yield, monthly reliability
MAIN – Main Street Capital	~6%	Monthly and growing yield
O – Realty Income	5–6%	Low-volatility monthly aristocrat
EPR – EPR Properties	~7%	Entertainment real estate focus
LTC / STAG	~6.7% / ~3.9%	Senior housing and industrial REITs

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Best Practices for High Dividend Seeking Investors

• High yields come with high risk. Think twice before chasing the top numbers—some of the highest payers are the most volatile.

• Diversification is your ally. Blending high-yield names with reliable growers (like Realty Income or MAIN) can moderate risk.

• Understand each company’s model. mREITs lean heavily on leverage and rate dynamics. BDCs hinge on loan credit quality. REITs rely on rent flows.

• Watch payout consistency. A long history of steady or growing dividends (e.g., Realty Income, MAIN) adds confidence.

• Consider ETFs for ease and diversification. High-income ETFs using covered-call strategies offer monthly payouts but have their own nuances. (MarketWatch)

Final Note

Conclusion: The Reality Behind a 20% Dividend Yield

A 20% dividend yield can look like a golden ticket for income investors, but in reality, it’s often a warning light flashing red. While such a yield promises enormous cash flow on paper, it usually reflects a troubled stock with a falling price, unstable earnings, or a payout that is simply unsustainable. Investors who chase these sky-high yields often fall into “dividend traps,” collecting big payouts for a short time only to face dividend cuts and sharp declines in share value.

The key takeaway is this: a dividend is only as good as the business behind it. Sustainable income comes from companies with steady cash flow, responsible payout ratios, and resilient business models—not from those trying to prop up a failing stock with unsustainable distributions. For most long-term investors, striking a balance between moderate yields and stability will build far more reliable wealth than chasing the fleeting allure of a 20% dividend yield.

For more valuable tips for smart investing, please read my new book, Whispers from a Quiet Investor. 

Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Paperback $10.99. 

Why Gold Has Become More Useful For Quiet Investors

 

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Gold’s Rising Role in a Fragmenting Financial World

Gold has emerged once again as a central force in the global monetary landscape. Once viewed as a relic of the past, it is now second only to the U.S. dollar in terms of official reserve value, surpassing even the euro. This growing prominence isn’t merely symbolic—it reflects profound changes in how central banks and nations are thinking about financial security, sovereignty, and risk.

A Rally Fueled by More Than Inflation

The past two years have seen a remarkable rise in gold’s market price. In 2024, it climbed sharply by 30%, and continued that upward momentum in 2025, briefly reaching a historic high of $3,500 per ounce. These gains cannot be explained solely by inflation fears or interest rate shifts. Instead, they point to a deeper, more strategic revaluation of gold’s role amid rising uncertainty and geopolitical instability.

One telling moment came when tensions flared between Israel and Iran. Gold prices reacted almost instantly, reinforcing its role not just as a hedge against economic forces but as a barometer of global unrest.

Old Models No Longer Apply

For years, gold’s value was tightly linked to real interest rates—when rates fell, gold rose, and vice versa. That relationship began to fray in recent years. Even with real yields moving higher, gold has continued its ascent. This suggests that traditional monetary factors are no longer the dominant force. Something more fundamental is driving demand.

Geopolitical Risk Takes Center Stage

Central banks are rethinking how they protect their nations’ wealth. In an era where economic tools are increasingly used for political purposes—such as sanctions and asset freezes—gold stands apart. It carries no issuer risk, requires no trust in a counterparty, and cannot be digitally blocked or seized. For many countries, especially those outside the Western financial framework, that’s an increasingly valuable proposition.

This shift is not just theoretical. It's playing out in the numbers. In 2024, global central banks added over 1,000 tonnes of gold to their reserves—far above historical norms. Total official holdings are now close to 36,000 tonnes, nearing levels last seen under the Bretton Woods system.

A Strategic Shift in Reserve Thinking

According to the latest analysis from the European Central Bank, this accumulation of gold is not a fluke. It reflects a deliberate move away from traditional reserve currencies. For the first time, gold now makes up about 20% of global reserves by market value, surpassing the euro.

What’s driving this shift isn’t short-term trading or speculation. It’s a conscious realignment. Central banks are treating gold as a strategic asset—a safeguard against both financial instability and geopolitical threats.

Emerging Markets Lead the Way

Countries like China, India, and Turkey are at the forefront of this movement. Together, they’ve added more than 600 tonnes of gold since late 2021. Their strategy is clear: reduce exposure to reserve assets controlled by Western powers and increase holdings in assets that offer autonomy and resilience.

Surveys from early 2024 show that while diversification remains a top goal, many central banks now cite protection from sanctions and political interference as key motivations for buying gold. For a growing number of nations, gold isn’t just a financial asset—it’s a geopolitical shield.

Redefining Reserve Policy

In the past, managing foreign reserves was largely about maximizing returns and minimizing volatility. Today, it’s also about managing exposure to systemic risks—both economic and political. Gold’s unique characteristics make it ideally suited to this new paradigm. It’s portable, globally recognized, and immune to many of the tools of economic coercion.

In fact, historical data shows a pattern: countries often increase gold reserves following sanctions or other forms of external pressure. This trend highlights how gold is being viewed not just as a hedge against inflation, but as protection against the rules and risks of the existing global order.

Gold’s New Strategic Status

The implications of this transformation are profound. Gold is no longer seen only as a store of value during inflationary periods or times of market stress. It is now a key instrument in the broader effort to secure monetary independence and insulate national reserves from external control.

As trust in traditional reserve currencies wavers in parts of the world, gold has stepped into a more central role. It’s not just a hedge—it’s a statement of sovereignty. Its reemergence signals a fundamental shift in how global powers are preparing for an increasingly unpredictable future.

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Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence Kindle $9.99, Amazon paperback $10.99. 

The Quiet Investor Approach: How Young Professionals Can Build Wealth with Dollar Cost Averaging

 

As a young professional, you're likely juggling career growth, student loans, social plans, and possibly your first 401(k). Investing might seem like one more overwhelming task, especially when the market swings and the news feels like a rollercoaster of opinions.

But there’s good news: you don’t need to be a financial expert, time the market, or take huge risks to build wealth. In fact, the best strategy might be the quietest one.

It’s called Dollar Cost Averaging (DCA)—a simple, low-stress approach to long-term investing that helps you build wealth without needing to monitor the market daily.

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💡 What Is Dollar Cost Averaging?

Dollar Cost Averaging (DCA) involves investing a fixed amount of money at regular intervals—weekly, biweekly, or monthly—regardless of the market's performance.

Example:
You invest $200 into an index fund every month. Sometimes it’s up, sometimes it’s down. However, you continue to invest the same amount regardless of the circumstances.

This consistency helps you:

• Buy more shares when prices are low

• Buy fewer shares when prices are high

• Smooth out the average cost over time

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🧠 Why DCA Is Perfect for Young Professionals

You're busy, and you’re building your financial future. DCA offers structure without stress.

Here’s why it works so well:

• Removes emotion from investing. You don’t have to guess when to buy.

• Reduces the risk of bad timing (such as investing a lump sum right before a dip).

• Builds good habits through automation and consistency.

• Fits any budget, starting as low as $50–$100/month.

• Works in the background, so you can focus on your career and life.

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⚙️ How to Get Started with DCA

Starting a DCA plan is easier than you might think. Follow these simple steps:

1. Pick your investments.
   Look for low-cost index funds or ETFs like:

   • VTI (U.S. total stock market)

   • VXUS (international stock market)

   • VNQ (real estate)

   • BND (bonds)

2. Decide on your contribution amount.
   Choose what fits your budget:

   • $50 per week

   • $100 or $200 per month

3. Automate it.
   Use your brokerage app (like Vanguard, Fidelity, Schwab, or M1 Finance) to schedule automatic investments.

4. Stay consistent.
   Keep going—even during market dips. That’s when you’re buying at a discount.

5. Review once a year.
   Check in to make sure your allocations still match your goals. You can rebalance if needed.

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📈 Example: A Realistic DCA Plan for a Young Professional

Let’s say you have $200/month to invest. Here’s a smart, diversified setup:

• $100 to a U.S. total stock market ETF
  (e.g., VTI) — broad exposure to U.S. companies

• $40 to an international stock ETF
  (e.g., VXUS) — adds global diversification

• $30 to a real estate ETF
  (e.g., VNQ) — gives exposure to property markets

• $30 to a bond ETF
  (e.g., BND) — helps stabilize your portfolio

Set it and forget it. Review it once per year. That’s it.

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🧾 What to Invest In (and What to Avoid)

Best assets for DCA:

• Broad stock market index funds (VTI, SPY)

• International ETFs (VXUS, IXUS)

• REITs (VNQ)

• Cryptocurrency (if you’re risk-tolerant and only using small amounts)

• Bond funds (for balance)

Assets to avoid for DCA:

• CDs and bonds with little price fluctuation (no benefit from averaging)

• Illiquid investments (like collectibles or startup equity)

• Dying sectors (DCA doesn’t fix a poor investment choice)

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🧘 Final Thoughts for the Quiet, Long-Term Investor

As a young professional, your greatest asset is time. Dollar Cost Averaging helps you take full advantage of it without the stress of trying to outsmart the market.

It’s not flashy, but it works. DCA helps you:

• Build wealth gradually

• Avoid panic-selling

• Make investing part of your lifestyle

Start small. Stay consistent. Be patient. Let the market’s natural ups and downs work in your favor, not against you.

If you’re ready to invest with more peace and purpose, DCA could be your most powerful tool—quietly working in the background while you focus on building your future.

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📘 Want to go deeper?
Check out my book: Whispers from a Quiet Investor — a guide to calm, consistent investing for long-term success. Available on Kindle for $9.99 and in paperback for $10.99.

Designing a Winning Portfolio With the Mindset of a Quiet Investor

 

Did you know that 75% of investor portfolios underperform? The reason many portfolios fail to meet expectations is that the investor hinders their performance with oversteering or a market-timing strategy. For this reason, you should consider a quiet investor approach when creating your portfolio. I can help you accomplish this task by sharing an adapted version of a chapter from my latest book, Whispers from a Quiet Investor. 

Chapter 17: Crafting Your Quiet Portfolio

“Don’t look for the needle in the haystack. Just buy the haystack.” — John Bogle.

Designing a quiet portfolio means applying all that you’ve learned about the mindset, habits, and systems of a disciplined investor to build a strategy that reflects your financial goals, comfort with risk, and time horizon. This chapter outlines a simple, low-maintenance approach guaranteed to stand the test of time.

Step 1: Define Your Time Horizon

Before diving into investments, ask yourself: “When will I need this money?” Your time horizon plays a crucial role in shaping your portfolio by prioritizing the right asset mix.

• ·         0–2 years: Focus on preserving value with safe options like cash, high-yield savings accounts, and certificates of deposit (CDs).
• ·           3–5 years: Minimize risk using bonds and conservative investments.
• ·         5–15 years: Aim for moderate growth via a balanced mix of stocks and bonds.
• ·         Over 15 years: Maximize growth with a portfolio dominated by stocks.

Understanding your time horizon ensures every financial decision aligns with your needs and goals.

Step 2: Decide on Asset Allocation

Asset allocation—the division of your portfolio into categories like stocks, bonds, and cash—is central to effective investing. While there isn’t a one-size-fits-all formula, tailoring your mix to your risk tolerance and objectives is key.

• ·         Conservative: Allocate 40% to stocks, 50% to bonds, and 10% to cash.
• ·         Balanced: Aim for 60% stocks, 35% bonds, and 5% cash.
• ·         Growth-oriented: Favor 80% stocks, 15% bonds, and 5% cash.
• ·         Aggressive: Invest 100% in stocks with no bonds or cash.

Choose an allocation you can maintain during market fluctuations to avoid impulsive decisions.

Step 3: Select Investment Vehicles

Quiet portfolios thrive on simplicity. A few well-chosen funds are enough to build a diversified, low-cost plan. Consider these options:

• ·         Three-Fund Portfolio: Combine a U.S. Total Stock Market Index Fund, an International Stock Index Fund, and a U.S. Total Bond Market Index Fund for global diversification.
• ·         Target-Date Fund: This hands-off option adjusts its allocation over time based on your anticipated retirement date, making it ideal for IRAs or 401(k)s.
• ·         One-Fund Portfolio: Choose a total market index fund, like Vanguard VTI or Fidelity FSKAX, for maximum simplicity.

Complexity doesn’t equal success—stick to low-cost index funds and let them work for you.

Step 4: Automate Your Portfolio

Consistency is the cornerstone of a quiet portfolio. Automation eliminates emotional decision-making, ensuring your strategy stays on track. Implement the following:

• ·         Set up automatic transfers from your paycheck or bank account.
• ·         Enable dividend reinvestment.
• ·         Schedule annual portfolio rebalancing (many brokerages provide this feature).
• Automation protects your portfolio from the pitfalls of inconsistency and emotional interference.

Step 5: Review Strategically

Quiet investing doesn’t mean neglecting your portfolio. Review it once or twice a year to ensure it aligns with your evolving goals and risk tolerance. Ask yourself:

• ·         Is my asset allocation still appropriate?
• ·         Do I need to rebalance?
• ·         Have my time horizon or financial objectives changed?

Avoid over-monitoring, as frequent changes can hinder long-term growth and development.

A Quiet Portfolio in Action

Imagine a 35-year-old saving for retirement over the next 30 years. Their portfolio might look like this:

• ·         80% stocks (a mix of U.S. and international).
• ·         20% bonds.
• ·         A low-cost three-fund strategy.
• ·         Automatic monthly contributions of $1,000.
• ·         Annual rebalancing.

This approach is straightforward, cost-effective, and designed for sustained growth over time.

Key Takeaways

1. A successful portfolio aligns with your time horizon, risk tolerance, and financial goals.
2.  Most investors thrive with a straightforward mix of index funds.
3. Consistency matters more than having a wide range of investment options.
4. Automate every aspect of your portfolio and resist the temptation to make unnecessary changes.

Ultimately, a quiet portfolio isn’t about flashiness. It’s about strength, stability, and smart decisions that compound over time. Get more investing advice in my latest book, Whispers from a Quiet Investor.

Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon $10.99. 

Why Ford Pulled Its Profit Guidance Despite The Tentative Labor Deal

Due to the labor stoppage, it is understandable why Ford (F) reported mixed third-quarter earnings. But it doesn't explain why the Dearborn, Michigan-based automaker joined GM in pulling its full-year guidance, even after reaching a tentative labor contract deal with the United Auto Workers (UAW). Something even bigger does. 

After-hours trading caused a price drop in Ford shares following the release of the third-quarter results.  The company's top-line revenue of $43.8 billion beat the estimated $41.21 by 11%. However, it substantially dropped from the $45.0 billion Q2 top-line earnings. The difference equates to a decrease in the adjusted earnings per share of $0.47 to $0.39.

Ford reported the company had earned $9.4 billion in adjusted earnings for interest and taxes (EBIT) toward its full-year target of $11 billion to $12 billion.  However, Ford claims the UAW strike and the ratification of the tentative agreement with the UAW is why the company is withdrawing its guidance for full-year 2023 operating results. 

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The Q3 Report

Even more interesting, Q3 represents the third time Ford reported performance across its three primary business lines: Ford Pro for its commercial and Super Duty trucks business, Ford Blue for gas-powered cars, and Ford Model e for its EV business. The results are as follows.

Ford Pro

• Revenue: $13.8 Billion vs. $14.65 billion estimate
• EBIT: $1.65 billion vs. $2.16 billion estimate

Ford Blue

• Revenue: $25.6 billion vs. $23.93 billion estimate
• EBIT: $1.72 billion vs. $194 billion estimate

Ford Model e

Revenue: $1.8 billion vs. $2.34 billion estimate

EBIT loss: $1.33 billion vs. $1.27 billion estimate

Since it is supposed to be the flagship for the future, the Model e EV business of $1.33 billion stands out as an indicator of extended troubles in that area.  Ford attributes the loss to its investment in next-gen vehicles. According to a company statement, "Many North American customers interested in buying EVs are unwilling to pay premiums for them over gas or hybrid vehicles, sharply compressing EV prices and profitability."

As a result, Ford CFO John Lawler is hesitant to publicly commit to a steady course forward for its upcoming Blue Oval City EV and battery plant, especially since Ford projected a $4.5 billion loss for the unit in the last quarter of 2023. Although EV sales were up 14.8% in the third quality, Ford will be looking hard at its EV cost price dilemma. This challenge may be difficult to overcome since it's apparent they have hit a price ceiling on these units.

Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon paperback $10.99

Why is Bank of America So Optimistic Among Concerns of a Bearish Winter?

 

Photo by Gorartser

By John Burson

Despite the looming possibility of another Fed rate high and a consumer slowdown, Bank of America's head of U.S. equity and quantitative strategy, Savita Subramanian, is beaming with optimism in the company of moaning bears.

This optimism is why Bank of America raised its year-end S&P 500 target from 4,300 to 4,600, reflecting a 3% upside from current S&P 500 levels. In an article in Yahoo Finance, reporter Josh Schafer quoted Subramanian as saying, "Recession averted, but a fresh wave of bear narrative around equities have emerged. The net message of our five target indicators is bullish, yielding a new 2023 year-end target of 4,600."

It's apparent that Subramanian and the rest of the BofA team no longer detect a recession in the U.S. economy. In fact, they believe the markets are already in a "recovery phase." According to their conclusions, the profit declines in the second quarter were rock bottom.

Subramanian predicts that the equal-weighted S&P 500 (which disregards the size of the companies) will outperform the standard S&P 500 index. He and his team also concluded that the possibilities of deglobalization forces would impact mega-cap tech stocks more forcefully than midcap stocks.

Is there any historical data that backs up this conclusion? To answer this question, B of A used data dating back to 1999. The historical data shows that the average S&P 500 year-end target at the end of August usually projects 5% gains for the rest of the calendar year. 

However, in the years when strategists see an end-of-August decline in the benchmark index, the S&P 500 performance exceeds the benchmark. Moreover, the S&P 500 rises every time the consensus forecast for the index drops during the last four months of the year. This means stocks have a good chance of running higher if the consensus forecast for the S&P 500 drops 2% through the end of this year.

BofA's Emphasis on the Impacts to the Equal Weighted S&P 500 and a Standard S&P 500

Do you know the difference between an equal-weight S&P 500 and a Standard S&P 500? Stock strategists often use these to dissect economic changes' impact on stocks. Here is a more detailed breakdown.

An equal-weighted S&P 500 and a standard (market-cap weighted) S&P 500 are two different ways of constructing and representing the performance of the S&P 500 index, a commonly followed benchmark for the U.S. stock market. The critical difference is how the individual stocks within the index are weighted.

Standard S&P 500 (Market-Cap Weighted)

In the standard S&P 500, the component stocks are weighted based to their market capitalization, which is the total market value (TMV) of a company's outstanding shares of stock. Essentially, larger companies with higher market capitalizations have a more significant influence on the index's performance.

This means that companies like Apple, Microsoft, and Amazon, which have some of the largest market capitalizations in the S&P 500, will significantly impact the index's movements more significantly than smaller companies.

Equal-Weighted S&P 500

   - In an equal-weighted S&P 500, all the component stocks are assigned the same weight, regardless of their market capitalization. This means that each stock in the index has an equal percentage representation.

   - For example, if the index consists of 500 stocks, each stock would initially have a weighting of 1/500th or 0.2% of the total index value. This approach gives smaller companies an equal say in the index's performance compared to larger companies.

Equal Weight vs Standard S&P 500

Diversification

An equal-weighted S&P 500 tends to be more diversified because it doesn't overly favor the larger companies. Market-cap-weighted indexes can be top-heavy, with a few large companies dominating the index's performance.

Performance

The performance of the two indices can differ significantly over time. Equal-weighted indexes can outperform market-cap-weighted indexes when smaller companies are doing well, but they can also underperform when larger companies dominate the market.

Rebalancing

Equal-weighted indices require periodic rebalancing to maintain the equal-weighted structure. This means selling some of the outperforming stocks and buying more underperforming ones to return them to equal weights. Market-cap-weighted indexes don't require this kind of rebalancing.

Risk

Equal-weighted indexes may have different risk profiles than market-cap-weighted indexes because they are not biased toward larger, more established companies.

Final Notes

Investors and fund managers choose these approaches based on their investment objectives, risk tolerance, and market outlook. An equal-weighted index can be a way to gain exposure to smaller companies and potentially benefit from their growth. In contrast, a market-cap-weighted index provides a more accurate representation of the overall market's performance. What do you think about Band of America's optimistic outlook, particularly given the current state of commercial real estate debt? More on that next time.

 

 Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon paperback $10.99.

Is Anheuser-Busch Inbev Stock Still a Good Investment in 2023?

 

When football quarterbacks attempt a pass, they never throw it at their receivers. They throw the ball where their receivers will eventually be. This technique resembles how investors approach a prominent stock taking a steep nose dive. Instead of focusing on the direction the stock is going, they contemplate where it will end up.

In the case of Anheuser-Busch InBev (NYSE: BUD), many investors are trying to determine where this stock will end up. An impassioned social media campaign has effectively dethroned the beer maker's star product, Bud Light, as the nation's number-one-selling beer. The primary reason for this turnabout is many Bud Light customers stopped buying the beer after Bud Light's executives paired with a transgender social media influencer named Dylan Mulvaney to launch a shipwreck of a marketing campaign. 

As a result of the backlash from the controversy, the stock price of Bud Light's parent company, Anheuser-Busch InBev, declined about 20% over two months. It dropped from a high of $66.39 on March 31 to $53.21 on May 31. In mid-June, this stock price hovered around $56. However, Bud Light sales continue to decline. So, the big question is where the BUD stock price will eventually end up.

To get an indication, let's examine all the aspects involved. 

The Dylan Mulvaney Controversy

A fierce ideological battle between liberals and conservatives is extremely intense in the U.S. today. Unfortunately, the Bud Light marketing team positioned its product in the center of a fire pit of controversy. The friction points were Bud Light's partnership with Dylan Mulvaney and unflattering remarks made by Bud Light marketing VP  Alissa Heinerscheid about Bud Light's target market. 

Mulvaney has over 10.8 million followers on different social media platforms. Although many believe Mulvaney's gender identification was the catalyst, the underlying issue was many in Bud Light's target market of 20-something  males and females rejected the beer company's efforts to promote an ultra-liberal agenda to its customers. In other words, this was an ill-fated attempt by Bud Light executives to boost their rating in the Corporate Equality Index, even though the company currently has a perfect score. 

After Mulvaney posted a video on April 1, BUD stock dropped 1.8%. The mainstream media and social media influencers had the spark they needed to sensationalize the backlash. However, Anheuser-Busch's impressive year-to-date share price made this price drop seem meager. And most analysts believe the backlash creates a buying opportunity instead of a reversal of fortune. 

Why Anheuser-Busch Inbev Will Be Fine

The news of Modelo Especial dethroning Bud Light as the number 1 selling U.S.dominated most talk shows and social media platforms for weeks. But guess which beer maker is Modelo's parent company? It's the same company that owns the nation's third-best-selling beer, Miller Lite? Anheuser-Busch InBev not only owns these two top beer brands, but it also produces 500 beers, including Budweiser, Corona, and Stella Artois.

Belgian-Brazilian brewer InBev acquired American brewer Anheuser-Busch to form Anheuser-Busch InBev in 2008. Before the acquisition, InBev was the third-largest brewing company globally, Anheuser-Busch had the top spot, and SABMiller was number two globally. So when Anheuser-Busch InBev acquired SABMiller, it completed a merger of the previous top three beer brewers worldwide. 

Unless beer drinkers boycott all three top-selling beers in the U.S., Anheuser-Busch is in no danger of collapsing. Yahoo Finance quoted Citigroup analyst Simon Hales as saying," The recent backlash in some parts of the U.S. to Bud Light’s new advertising campaign with Dylan Mulvaney is overdone,” and “recent share price weakness provides an attractive buying opportunity.”

What's Really Driving Anheuser-Busch?

When Anheuser-Busch InBev acquired SABMiller in 2016, it assumed over $120 billion in debt. This sent spooked investors and a selling spree ensued, resulting in a drop of 56% percent in its stock price. Then, Covid 19 closed on-premises bars and restaurants in 2020, hamstringing the beer maker's earning power. 

Despite these challenges, Anheuser-Busch Inbev reduced the SABMiller debt by $40 billion over the last six years. This drawdown of debt was an impressive accomplishment. But many investors were not amused because the company cut its dividend to generate $8 billion in free cash flow each year. 

However, this current investor attitude toward Anheuser-Busch can appeal to many long investors due to the company's continuing deleveraging strategy. So, it's highly likely that the beer maker will reach a comfortable debt level to the point of redirecting its enormous free cash flow to increased dividends and buybacks. 

What Makes BUD Stock Appealing?

Many people still drink beer through recessions and even depressions. In fact, they may even consume more. Since it pays a forward dividend of 1.25%, most investors consider BUD stock a defensive investment. It's the type of dividend-paying stock that attracts investors whenever hard economic times seem imminent. 

In addition, investors have other compelling reasons to invest in BUD Stock, including;

• The company's 12-month P/E ratio of 22.38x is slightly better than the sector's P/E ratio 2.84x.
• Anheuser-Busch's trailing price-to-book (P/B) ratio of 1.76x is better than the 2.62x sector median. 
• Currently, the company's stock price is in the 56 range. But  CNN Business reports 8 analysts offer 12-month price forecasts with a median target of 68.50, a high estimate of 76.00, and a low of 60.  

However, you should temper these positives with some realities of the present. For example, BUD's trailing-12-month earnings per share (EPS) fails to justify its current trading price.  

Making an Anheuser-Busch Investing Decision 

Despite the distractions caused by the Dylan Mulvaney boycott, many stock analysts agree that Anheuser-Busch can leverage its substantial market share in the beer brewing sector to reward value and income investors in the foreseeable future. 

Your decision to invest in Anheuser-Busch is a personal and financially unique one. However, when considering your investment approach, consider a buy-and-hold position for this stock. 

Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon paperback $10.99.

Takeaways From Amazon Missing Its Revenue Targets

Aug. 5, 2021

It's been a long time is Amazon.com, Inc. (AMZN) fell short of revenue estimates, but it happened last week. As a result, stunned investors pushed the share price down by 7.6% or $120 billion in market value. 

If that wasn't enough, Amazon added to the surprising news by predicting slower sales growth for the third quarter of 2021. While this may be somber news for most investors, others could see these events as the beginning of the end of the pandemic era. As people resume normal activities, overall consumer spending patterns begin to diversify.

This rebalancing of the cyclical and consumer cyclical stocks may make some investors nervous about Amazon's investment viability, but we are talking about Amazon. The company's superhero fundamentals and penchant for innovative change keep core investors in place. Additionally, this company has added nearly 500,000 employees over the past year. Additionally, with the influx of new Amazon Prime members, there is no indication that demand will slow down in the foreseeable future.

Whispers from a Quiet Investor: The Answer to Successful Investing through Cunning Intelligence. Kindle $9.99, Amazon paperback $10.99.