6 crash-proof investments with high dividend yields

Is a downturn coming? Here are six ideas to defend your portfolio

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Fears are growing that global equity markets are becoming over-valued, particularly in the US but also here in Australia. The ASX hasn’t seen a 10% pullback for some time, and the longer we go without one, the greater the chances of one occurring sooner.

One strategy to protect your portfolio during a downturn is to increase your exposure to solid, defensive stocks with high dividend yields.

Here are six ideas, paying high dividend yields that should fare better than most during a downturn…

Primary Health Care Limited (ASX: PRY)

You can’t get much defensive than a health care provider. Primary operates medical centres, diagnostic imaging and pathology services around Australia. Currently paying a fully franked dividend yield of 4.5% and sporting an undemanding P/E ratio of 13.9x, Primary is one to add to your watchlist.

JB Hi-Fi Limited (ASX: JBH)

With a 5% fully franked dividend yield, the consumer electronics retailer is forecasting a slight increase in revenues next year – but that may not factor in a range of Apple products including a new iPhone, an iWatch as well as upgrades to the iPad, iMac and MacBook laptop range – all expected to be released tomorrow. Those new products could see the retailer smash market expectations.

Asia Pacific Data Centre Group (ASX: AJD)

A real estate investment trust (A-REIT) focused on owning data centres, APDC is paying shareholders a dividend yield of 7.9% (unfranked). The value of the business is unlikely to deteriorate much during a downturn, offering investors some protection while the yield would likely be maintained.

360 Capital Industrial Fund (ASX: TIX)

360 Capital is another A-REIT and holds a portfolio of industrial properties, with 94% in warehousing / distribution. A number of those properties are leased by Australia’s largest supermarket retailer, Woolworths Limited (ASX: WOW), and 360 Capital is paying a 7.8% dividend yield (unfranked).

STW Communications Group Ltd (ASX: SGN)

An advertising and marketing group, STW currently pays a 7.3% fully franked dividend yield and appears cheap, trading on a P/E ratio of 9.4x. Already suffering from a downturn in the advertising market, the current price may already include most of the bad news.

McMillan Shakespeare Limited (ASX: MMS)

Currently paying a 4.8% fully franked dividend yield, the salary packaging and financing company suffered from the previous government’s proposed changes to FBT rules. Earnings are expected to improve dramatically next financial year, which could see the dividend also rise.

Wondering where you should invest $1,000 right now?

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*Returns as of January 12th 2022

Motley Fool writer/analyst Mike King owns shares in McMillan Shakespeare. You can follow Mike on Twitter @TMFKinga

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