According to reports, leading global investment bank Goldman Sachs is predicting a one in three chance that Australia will enter a recession in the very near future.
While there is no need to ring the alarm bells – recessions are a natural part of the economic cycle – it is worth considering how a recession may affect companies within your portfolio.
A recession implies a sluggish business environment and if it occurs soon it will place major headwinds on many companies that are already struggling to produce growth in revenues and earnings.
With this economic scenario in mind, it's worth considering the benefits of holding quality, defensive, high-dividend yielding blue-chip stocks in your portfolio. Here are three to consider…
- Australian and New Zealand Banking Group (ASX: ANZ) – like its major banking peers, ANZ's share price recently hit a fresh 52-week low. The stock has bounced a little and is currently fetching around $27.50. According to research by Morningstar, ANZ, if forecast to pay higher dividends and in the financial year 2016 those dividends, should total 184.8 cents per share (cps). This implies a fully franked dividend yield of 6.7%.
- AMP Limited (ASX: AMP) – currently trading well off of its 52-week high, this leading wealth management company is forecast to pay a growing stream of dividends over the next couple of calendar years. In 2016, a dividend of 31.5 cents per share is forecast which at today's share price of $5.75 equates to a partially franked dividend yield of 5.5%.
- Woolworths Limited (ASX: WOW) – most investors will by now be familiar with the competitive environment and business challenges facing Australia's largest retailer Woolworths. While the clouded outlook for the group does make the earnings outlook less predictable, Morningstar's data shows a forecast for the dividend to remain consistent at 139 cps. With the share price trading near its recent low of $24.71, the implied fully franked yield is 5.6%.
