This year’s stock market crash caught many investors by surprise. While the market has recovered some of its losses over the past few months, there’s no guarantee this trend will continue.
The coronavirus crisis continues to rumble on, and the outlook for the UK economy is bleak. A second wave of coronavirus could cause another market slump later in the year.
However, some companies could be attractive investments, no matter what the future holds for the stock market. FTSE 100 stocks, like the two businesses below, could even generate positive returns in the next stock market crash. As such, now may be a good time to snap up a share of these defensive businesses.
Stock market crash bargains
Investor sentiment towards oil giant Royal Dutch Shell (LSE: RDSB) has crumbled this year. The company’s decision to slash its dividend following the collapse in the oil price caused many income investors to sell the stock. Falling oil prices have also hit the group’s profits.
Despite these issues, Shell’s outlook has improved significantly since the stock market crash in March. For example, the price of oil has risen by more than 300% since the end of April. The group’s trading and refining operations have also provided additional profits. This income has helped the business avoid any financial stress.
Following the recent increase in oil prices, City analysts are now expecting the group’s earnings per share to rise 150% in 2021. And even after the recent dividend cut, the stock still supports a market-beating dividend yield of 5.4%.
Considering these figures, and the fact the stock has fallen 42% over the past 12 months, now could be a good time buy a share of Shell as part of a diversified portfolio while it trades at a low level. The company’s recovery over the next few years could produce high total returns for investors.
As one of the largest public precious metal miners, Fresnillo (LSE: FRES) may have the qualities to protect any portfolio from a stock market crash. In times of market turbulence, the price of precious metals, such as gold and silver, can increase. This increases the profit margins for miners like Fresnillo.
Wider profit margins mean fatter profits for shareholders. Indeed, analysts are currently expecting Fresnillo to report a 47% increase in income for 2020, followed by growth of 70% in 2021. They’re also projecting an 83% dividend increase in 2021.
If the company hits this target, the stock will offer a yield of 2.1%. As many other FTSE 100 businesses slashed their payouts in the stock market crash, this could make Fresnillo one of the market’s top blue-chip income stocks.
Therefore, if you’re looking for a company to protect your portfolio in the next stock market crash, Fresnillo could be the best choice. The firm has outperformed this year, and it seems likely the business will continue to prosper as the outlook for the global economy remains uncertain.
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Rupert Hargreaves owns shares in Royal Dutch Shell B. The Motley Fool UK has recommended Fresnillo. 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.