We Fools believe that investors should favor businesses that can crank out profits in good times and bad. But which companies, in particular, are capable of such a feat? We asked a team of investors to weigh in, and they picked PepsiCo (NYSE: PEP), Brookfield Renewable Partners (NYSE: BEP), and Tanger Factory Outlets (NYSE: SKT).
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A solid dividend in good times and bad
John Rosevear (PepsiCo): I've always liked PepsiCo for investors seeking a stock for all seasons. It's easy to dismiss the company as a seller of sugar water, but I think of it a bit differently: It's a distribution company that has lots of compelling products to put on its trucks, with new products added all the time.
Remember that PepsiCo's products include over 20 brands beyond its carbonated-beverage Pepsi range, including juices and energy drinks and the huge-selling Frito-Lay and Quaker Oats brand families. Now think about all the places you see those products: corner stores, cafeterias, take-out restaurants, and many others, not just in the U.S. but all over the world. How did they get there?
They got there via PepsiCo's tremendous distribution network. PepsiCo has the ability to get new snack and beverage products in front of a whole lot of people in a whole lot of places fairly quickly. And while recessions hurt sales of just about everything, people who like chips and soda -- or orange juice and Gatorade -- don't usually stop buying those things when times are tight.
CEO Indra Nooyi has kept PepsiCo innovating, moving it into new product lines for fat- and calorie-conscious buyers. She has also kept the company's long track record of dividend growth going -- and absent a crisis, that's likely to continue.
The upshot: A well-run business that offers growth in good times, pays a solid 2.9% dividend, and should be steadier than most in a downturn.
An energy yield for any market
Travis Hoium (Brookfield Renewable Partners): There aren't a lot of companies that will operate in the same way whether we're in a bull or bear market. But yieldcos that own renewable-energy projects with long-term contracts to sell energy to utilities aren't going to change their strategies if the market takes a turn for the worse. One of the most stable yieldcos on the market is Brookfield Renewable Partners.
The company owns primarily hydroelectric power assets around the world, although it's adding wind farms to the portfolio, as well. The company aims to deliver 12% to 15% annualized total returns, which includes a dividend increase of 5% to 9% from organic cash flow growth and new projects. That's growth on top of a current dividend yield of 5.4%.