• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Grantham's safe-haven stock picks

It’s a scary picture. Due to last year’s market rout, a lot of stocks are already in correction territory. If the market continues to plunge, many investors’ portfolios will be deep in the red.

Grantham is the co-founder and investment chief at asset management firm Grantham, Mayo, Van Otterloo & Co. Given his gloomy forecast, let’s take a look at a few safe-haven stocks in GMO’s portfolio.

Coca-Cola (KO)

Coca-Cola is a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.

The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.

Add solid geographic diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can thrive through thick and thin. After all, the company went public more than 100 years ago.

More impressively, Coca-Cola has increased its dividend for 60 consecutive years. The stock currently yields 2.9%.

According to GMO’s latest 13F filing to the SEC, the asset manager owned 5.89 million shares of Coca-Cola at the end of September 2022, valued at $329.83 million.

Johnson & Johnson (JNJ)

With deeply entrenched positions in consumer health, pharmaceuticals and medical devices markets, healthcare giant Johnson & Johnson has delivered consistent returns to investors throughout economic cycles.

Many of the company’s consumer health brands — such as Tylenol, Band-Aid, and Listerine — are household names. In total, JNJ has 29 products each capable of generating over $1 billion in annual sales.

Not only does Johnson & Johnson post recurring annual profits, but it also grows them consistently: Over the past 20 years, Johnson & Johnson’s adjusted earnings have increased at an average annual rate of 8%.

The stock has been trending up for decades, all while returning an increasing amount of cash to shareholders. JNJ announced its 60th consecutive annual dividend increase last April and now yields 2.7%.

As of Sept. 30, 2022, GMO held 3.00 million shares of JNJ, worth approximately $490.49 million at the time.

U.S. Bancorp (USB)

Rounding out the list is U.S. Bancorp, the parent company of U.S. bank and one of the largest banking institutions in the country.

The banking industry isn’t quite as shockproof as consumer staples or healthcare. But interest rates are on the rise, and that could serve as a tailwind for banks.

Banks lend money out at higher interest rates than they borrow, pocketing the difference. As interest rates increase, the spread earned by banks widens.

To tame spiking inflation, the Fed raised its benchmark interest rates by 50 basis points in December, marking its seventh rate hike for the year.

In September, the bank increased its quarterly cash dividend from 46 cents to 48 cents per share. At the current share price, the company yields a generous 4.0%.

At the end of Q3 2022, Grantham’s asset management firm owned $384.16 million worth of U.S. Bancorp.

Sponsored

Follow These Steps if you Want to Retire Early

Secure your financial future with a tailored plan to maximize investments, navigate taxes, and retire comfortably.

Zoe Financial is an online platform that can match you with a network of vetted fiduciary advisors who are evaluated based on their credentials, education, experience, and pricing. The best part? - there is no fee to find an advisor.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

What to Read Next

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.