United Health (UNH)

UnitedHealth’s quarterly dividend payout, currently US$1.45 per share, and the performance of its stock, which is roughly 33% over the past year, suggest that the company is currently in strong financial shape.

But the insurance and healthcare leader is well positioned to weather any long-term financial tumult as well.

Regardless of what happens to the economy, Americans will still need health care. Millions of them are already UnitedHealth customers.

UnitedHealth is a diversified company. In addition to its thriving insurance business, it also provides software and information technology to a number of clinics and hospitals.

As the medical tech space continues to grow, so should UnitedHealth’s profits.

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U.S. Bancorp (USB)

U.S. Bancorp is the parent company of U.S. Bank, one of the U.S.'s largest banking institutions.

Betting on bank stock might seem counterintuitive when a stock market correction is expected to hammer investors’ finances, but banks tend to do well in rising interest rate environments: As rates increase, the profit margin, or spread, earned by banks widens.

Rather than turning itself into a casino through the kinds of risky derivative plays that tanked some of its competitors in 2007-2008, U.S. Bancorp has instead been focused on innovating and providing digital service for its customers.

The increased efficiency and lower operating costs that result should be music to investors’ ears.

Over the past year, U.S. Bancorp shares have risen by about 20%.

Coca-Cola (KO)

Despite the push for more healthy food and beverage consumption, Coca-Cola’s dominance of the soft drink market remains unmatched.

But the company’s offerings extend far beyond liquid sugar. Coke also sells popular bottled water brands Dasani and Smartwater, big-name juices like Minute Maid and Simply, and international coffee products Costa and Georgia.

What makes Coca-Cola an interesting defensive play is the company’s consistently impressive profit margin, which has averaged 23.6% over the last decade. That’s largely the result of Coke’s ability to tinker with portion sizes and prices and having the capital to invest in greater productivity.

A faltering stock market shouldn’t change any of those dynamics.

In 2021, Coke’s quarterly dividend payout hit US$0.42, almost double what it was a decade ago. The company’s stock is up roughly 25% over the past year.

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Don’t forget inflation

Grantham says portfolios also need protection from inflation, which hit a 40-year high in the U.S., and a three-decade high in Canada, in December.

"This is the first time that inflation, the number one predictor of a market downturn since 1925, is being ignored,” he said.

At times of high inflation, investors often turn to real assets, which tend to hold their value. That’s why collectibles — diamonds, wine and fine art — are taking up an increasing amount of room in modern portfolios.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

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About the Author

Clayton Jarvis

Clayton Jarvis

Reporter

Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.

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