Stock market crashes are part and parcel of investing. As the current Omicron-induced market wobble shows, many investors are willing to sell shares at the drop of a hat.
Could we see a crash before the year’s out? It’s possible. Sooner or later there’ll be one. But I wouldn’t let that stop me buying stocks today. Here are three I’d be particularly comfortable owning even if markets were to crash tomorrow.
Primary Health Properties (LSE: PHP) invests in primary healthcare facilities in the UK and Ireland. Its latest acquisition is quite typical, being a modern purpose-built facility, fully let to a substantial GP practice and a pharmacy. This acquisition increases its portfolio to a total of 519 assets.
The properties are let on long leases and most of the rental income is backed, directly or indirectly, by the UK and Irish governments. The lease duration and tenant profiles give PHP an exceptionally secure rental income stream.
The company pays quarterly dividends. These have totalled 6.2p for 2021, giving a yield of 4.1% at the current share price. This is the 25th consecutive year of dividend growth.
One downside risk for PHP is that the appeal of the primary health property sector is attracting new purchasers, meaning the group is facing increased competition for viable opportunities. Nevertheless, management believes PHP “remains exceptionally well positioned to deliver low-risk sustainable shareholder returns”.
Flight to safety
Gold often does well when stock markets crash. This is one reason why I’d be happy to buy Endeavour Mining (LSE: EDV) today. The company has six producing gold mines across Burkina Faso, Côte d’Ivoire and Senegal. It also has a strong portfolio of advanced development projects.
Nevertheless, I need to be aware that operational setbacks are a risk with miners and can hurt earnings and dividends. Having said that, the impact on multi-asset EDV would be lower than for a single-asset producer.
The company has an attractive progressive dividend policy. It’s set minimum payouts for 2021 ($125m), 2022 ($150m) and 2023 ($175m). At the current share price, these equate to yields of 2.1%, 2.5% and 3%.
But there’s a further element to the dividend policy. Distributions may be supplemented with additional dividends and share buybacks, providing the prevailing gold price remains above $1,500 per ounce and the company’s leverage remains low. It’s currently buying back shares.
A third stock I’d be more than comfortable buying today, regardless of the risk of a market crash tomorrow, is Personal Assets Trust (LSE: PNL). The trust has a long history of successfully meeting its investment objective “to protect and increase (in that order) the value of shareholders’ funds per share”.
It does this by diversifying not only across equities, but also other assets. Equities currently account for 41.4% of its portfolio. Its top five stock holdings are Microsoft, Alphabet, Visa, Nestlé and Unilever. Meanwhile, it has 30.3% in US index-linked bonds, 20.3% in cash and UK treasury bonds, and 7.9% in gold bullion.
PNL’s multi-asset positioning mitigates the impact of a stock market crash. But on the other side of the coin, there’s the risk — almost an inevitability — that it will underperform in rampant bull phases of equity markets. I also need to be aware that it has an extremely conservative dividend policy and a current yield of just 1.1%.
G A Chester has no position in any of the shares mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet (A shares), Microsoft, Primary Health Properties, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.