2 Recession-Resistant Dividend Stocks to Buy and Hold

Over the past few weeks, oil prices have decreased as geopolitical tensions in the Middle East have eased. While that's great news, this is still an evolving situation, and we can't say for sure that we are out of the woods. It is still possible that the economy will enter a recession relatively soon, and if it does, it may drag down broader equities along with it. Investors can prepare for this by buying shares in companies that perform relatively well even during economic downturns. Let's consider two stocks that fit the bill: CVS Health (CVS +1.37%) and Gilead Sciences (GILD 3.67%). Read on to find out why these two healthcare leaders are great picks to prepare a well-diversified portfolio for a recession.

Image source: Getty Images.

1. CVS Health

Although it is best known as a pharmacy chain operator, CVS Health has a diversified healthcare business that spans primary care and health insurance, and it is also a leading pharmacy benefits manager. The company's operations are fairly defensive and can perform relatively well even during recessions. Take CVS' insurance business. Health insurers tend to experience steady demand even as the economy weakens, since patients continue to seek medical services regardless of economic conditions.

CVS Health also has significant exposure to government-sponsored healthcare plans. While that comes with some risks, one advantage is that government programs can be somewhat resilient during recessions (although they are by no means recession-proof). CVS Health's other businesses display similar characteristics, making it an attractive stock to buy during recessions.

Expand

NYSE: CVS

CVS Health

Today's Change

(1.37%) $1.41

Current Price

$104.22

Key Data Points

Market Cap

$131BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$102.40 - $105.43

52wk Range

$58.50 - $106.15

Volume

81.1K

Avg Vol

8.2M

Gross Margin

13.88%

Dividend Yield

2.59%

Meanwhile, despite encountering some headwinds in recent years, CVS Health has bounced back. The company's financial results have improved as it has found a way to better control rising expenses and shrinking margins within its Medicare Advantage business. Further, the company has attractive long-term prospects, given its diversified healthcare operations, competitive advantages from several sources -- including steep barriers to entry in the insurance industry -- and the expectation that healthcare spending will increase over the long run as the world's population ages.

Finally, CVS Health is a solid dividend stock. It offers a forward yield of 2.6%, compared to the S&P 500's average of 1.1%, and it has increased its payouts by 56.5% over the past decade. CVS Health is an attractive dividend stock to buy for investors worried about a coming recession.

2. Gilead Sciences

Gilead Sciences is a leading drugmaker. The company is known for its work in the market for HIV medicines, where it is one of the top players thanks to therapies like Biktarvy (the top prescribed HIV regimen in the U.S.) and Descovy for PrEP. Over the past few years, it has also made progress within its oncology business. Gilead Sciences should see consistent demand for its products even in an economic downturn. HIV patients take medicines for the rest of their lives.

Frequent missed doses can lead to significant health problems. Additionally, for most patients, third-party payers cover much of the bill. We could say something similar about Gilead Sciences' oncology business. Some may argue that top-line growth has been slow for the company in recent years.

Expand

NASDAQ: GILD

Gilead Sciences

Today's Change

(-3.67%) $-4.95

Current Price

$129.89

Key Data Points

Market Cap

$167BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$129.54 - $135.01

52wk Range

$107.75 - $157.29

Volume

78.1K

Avg Vol

7.4M

Gross Margin

79.41%

Dividend Yield

2.39%

Demand for the company's Veklury, a COVID-19 treatment, has been fairly inconsistent. However, Gilead Sciences' pipeline should help address this problem. Relatively recent launches -- such as Livdelzi, a medicine for primary biliary cholangitis (a chronic autoimmune disorder) -- and future ones, like anito-cel, an investigational cancer medicine that could earn approval by year-end, could help boost its financial results. Gilead Sciences has a deep pipeline, and its most important medicine, Biktarvy, won't lose patent exclusivity for another decade. Finally, the company offers a forward yield of 2.4% and has grown its payouts by 74.5% over the past 10 years. Gilead Sciences could help stabilize investors' portfolios in a recession.