My top five favourite stocks in the world

Coca-Cola Co (NYSE: KO)

Is there a product that is more famous and more ubiquitous in the world than Coca-Cola? I challenge you to name one. The Coca-Cola Company is the business behind the brand, controlling global ownership of this invaluable trademark. Coke has been a solid investment for decades.

No challenger can dislodge its century-old brand, nor consumers' love for it. This makes Coca-Cola recession-proof, inflation-resistant and a formidable investment. Warren Buffett held Coca-Cola shares for decades, and that says more than anything I can.

Procter & Gamble Inc (NYSE: PG)

Procter & Gamble may not be the household name that Coca-Cola is. But I'd wager that there may be even more Procter & Gamble products than Coca-Cola ones in most Australians' houses as I write. This consumer staples giant is the name behind beloved household brands like Gillette, Oral-B, Fairy, Head & Shoulders, Vicks, Tide, Olay, and Old Spice, amongst others.

These brands have graced households all over the world for decades. Given how ingrained into daily life they are, this makes Procter & Gamble another top stock, and a defensive, reliable investment one can hold for decades.

Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)

Google-owner Alphabet is next up. This company's incredibly successful Google Search product, its flagship, needs little introduction. It is nothing less than the world's gateway to the internet, and has been for 20 years. These days, though, Alphabet has far more going for it than just Google Search. It also owns a leading AI platform in Gemini. Not to mention one of the world's most popular entertainment platforms, YouTube. Alphabet's other ventures include Google Cloud, and self-driving vehicle company Waymo.

There is so much to like about Alphabet. It is my yp Magnificent 7 stock, and is set, at least in my view, to be a world-leading company for decades to come.

Nintendo Co Ltd (TYO: 7974)

Next up, we have another household name in Nintendo. It's my opinion that Nintendo owns some of the most valuable intellectual property in the world. It has been a leader in gaming since the 1980s, with many of its original characters, including Donkey Kong and Mario, remaining entertainment staples today. In addition, Nintendo also part owns the most successful entertainment franchise in history: Pokémon.

This is a company that knows the value of its property and knows how to protect and leverage it. It has gone from strength to strength in recent years, and, in my view, remains a top stock and a screaming buy for long-term investors.

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Our final stock is our only ASX share on this list. Washington H. Soul Pattinson and Co is an investment house. It manages a vast, underlying portfolio of investments for its shareholders. Soul Patts has been doing this for decades, and is very good at it.

Earlier this year, the company confirmed that its shareholders have enjoyed a total return (share price growth plus dividends) of 12.9% per annum over the 25 years to 31 January 2026. That's well above what the broader market returned. This top stock also has the best dividend growth streak on the ASX, having delivered an annual dividend hike every year since 1998.

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It's my view that ASX investors who are looking to brace their portfolios against further geopolitical or economic shocks should resist the siren's song of buying energy shares, oil ETFs or other short-term bets.

Instead, those investors should consider which companies are best placed to protect their earnings bases amid the significant challenges that the world is currently throwing their way.

It's my view that consumer staples stocks are a sector that is best positioned to protect investor capital amid high levels of uncertainty. Consumer staples stocks are companies that produce or sell goods that we tend to need to buy regularly. That includes food, drinks and household essentials, as well as alcohol and tobacco. Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Endeavour Group Ltd (ASX: EDV) are all prominent examples on the ASX.

However, I think an ASX ETF is a better option than a single ASX stock in terms of protecting a portfolio against uncertainty. That's why I think the iShares Global Consumer Staples ETF (ASX: IXI) is a perfect fund for an uncertain 2026.

Why this ASX ETF is an antidote for uncertainty

As the name implies, this ASX ETF holds a basket of global consumer staples stocks. These range from food and drink producers like Coca-Cola Co, Nestle and Cadbury-owner Mondelez International and makers of household essentials like Colgate-Palmolive and Procter & Gamble to staples retailers and grocers like Walmart, Costco Wholesale and Kroger. Even our own Woolworths and Coles feature as holdings.

It's my view that these sorts of companies can ride out economic shocks and inflation better than any other sector. We all need to buy food and household essentials on a regular basis. That means that, although painful to consumers, these companies can effectively pass on higher costs without the threat of significant sales losses.

Even if consumers switch en masse from expensive branded products to cheaper home-brand options, this ASX ETF holds a mix of companies with strong brands (Procter & Gamble, Coca-Cola) and supermarket stores, mitigating this potential trend.

IXI's holdings are also spread across many different markets, also lowering geographic and currency risk to the ASX investor.

Pulling all of these factors together, and I think we have an ASX ETF that is a perfect investment for the uncertain world we find ourselves in in 2026.

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Thanks partly to our unique system of franking, as well as some good old fashioned love of country, it's fair to say that ASX investors have a strong local bias.

When we do branch out to invest beyond our shores, it is usually a direct flight to the US markets. As I've written here before, the US is, as it should be, the first port of call for ASX investors seeking international diversification. No one can deny that the US is home to the vast majority of the world's best and most dominant businesses. No other country's share market constituents can match the size, scope and scale of top US stocks like Amazon, Alphabet, Microsoft, Netflix, Mastercard, Procter & Gamble, Apple, and countless others.

However, that doesn't meaning investing in US stocks isn't without risk. The US-Iran war that has been raging all month proves that. As such, I think the prudent investor might wish to consider diversifying beyond just Australia and America. The easiest way to do this, by far, is by using exchange-traded funds (ETFs).

Let's go through some of the best options for stocks outside Australia and the US.

3 ASX ETFs that can help diversify a portfolio

First up, there's the Vanguard All-World ex-US Shares Index ETF (ASX: VEU). This ETF, as its name implies, throws a whole bunch of different countries' stock markets together, with the notable exception of the US. The largest contributors to VEU's portfolio include Japan, the United Kingdom, China, Canada, India, and Taiwan. A healthy mix of advanced and developing economies there. ASX do feature in this ETF as well, although they make up just 4.3% of the entire portfolio.

Another option to consider is the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE). VGE focuses exclusively on emerging economies, so you won't find European, British or Japanese stocks here. Instead, VGE's largest contributors are countries like China, Taiwan, Brazil, South Africa and Saudi Arabia.

Finally, investors can consider the iShares MSCI EAFE ETF (ASX: IVE). This fund covers markets from Europe, Asia and the Far East (EAFE). It offers exposure to countries ranging form Japan, Spain and the UK to Germany, Singapore and Israel. Again, Australia is included as well, but contributes just over 6% to IVE's holdings.

Foolish takeaway

All three of these ASX ETFs offer Australian investors an easy way to add exposure to stocks from Europe, Asia and Africa to their portfolios. These regions are under-represented in the vast majority of ASX portfolios, and can help insulate investors from adverse movements on the American or Australian markets.

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But not all US stocks are at all-time highs right now. In fact, many quality names have been left in the dust as investors flock to the tech titans that are so popular right now.

Today, let's discuss three US stocks that I believe are among the best businesses out there, but are currently underappreciated by the market.

Three high-quality US stocks I would buy at current prices

Procter & Gamble Inc (NYSE: PG)

Procter & Gamble is one of the best consumer staples stocks in the world. It might not be a household name itself, but I can almost guarantee that its products would be in most readers' houses as we speak. This company's brands include Gillette razors, Fairy dishwashing products, Oral-B toothpaste, and Pantene shampoo.

Procter & Gamble is distinguished by its phenomenal dividend track record. It has increased its annual dividends every single year for 69 years running. Despite this inherent quality, Procter & Gamble shares have had a rough year, currently down aobut 14% in 2025. Although the company has recently bounced off a new 52-week low of just over US$145 a share, I think its current 2.9% dividend yield represents a nice entry point.

Costco Wholesale Corp (NASDAQ: COST)

Next up, we have another US stock and consumer staples company in Costco, famous for its bulk-focused warehouse supermarkets. Its unique membership model has driven this company to immense profitability, evident from its five-year gain of 133%. Costco also has an impressive dividend track record. It has increased its annual dividend for 21 consecutive years, by an average of 12.97% per year since 2020.

However, just like Procter & Gamble, Costco has had a rough year. This US stock has lost 11.1% over 2025 so far, and is down more than 20% from its last 52-week high. Although I wouldn't call this company cheap just yet, it is still a rare dip for a high-quality name that almost never goes on sale. I'm seriously considering adding more shares to my position at these prices.

Waste Management Inc (NYSE: WM)

I've always been attracted to waste management as an investable industry, given its inherent defensiveness. Waste Management is the largest of these US stocks, and the most dominant. It has been growing its revenues and earnings like clockwork in recent years, helping the company to do the same with its dividends.

Waste Management has a 22-year streak of dividend increases, and has grown its payouts by an average of 8.65% per annum over the past five years.

Yet investors have been tepid on this company over 2025, with Waste Management stock down almost 10% from its May record high.

Again, if this US stock stagnates any further, I might add some more shares to my position.

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However, there is another place to find dividend stocks that makes the ASX's most consistent payers look like amateurs. The US markets are home to most of the world's best businesses. And that means the world's best dividend stocks.

Here are two of those stocks, and why I think they just might be a pair of the safest dividend investments in the world. As much as any share can be, anyway.

Two dividend stocks with ultra-reliable payouts

Procter & Gamble Inc (NYSE: PG)

Procter & Gamble isn't exactly a household name, in Australia or the US. But many of its dozens of household brands are. They range from Oral-B toothpaste and Old Spice deodorant to Fairy dishwashing and Gillette razors.

These products can be found right around the world. They are trusted brands that consumers don't think twice about buying over and over again. Thanks to the essential nature of this valuable brand portfolio, Procter & Gamble is a great example of a quality, all-weather stock with an incredibly reliable earnings base from which it can pay shareholders dividends. And that makes Procter & Gamble a stellar dividend stock.

To prove this durability, this company has one of the longest streaks of annual dividend increases around, with shareholders getting a pay rise for 69 years in a row (including in 2025).

Procter & Gamble stock last traded on a dividend yield of 2.85%.

Coca-Cola Co (NYSE: KO)

Our next stock is about as 'household name' as it comes. Coca-Cola needs little introduction as the largest beverage company in the world. Its namesake product is simply as iconic as iconic gets, and one of the most universally recognised products on the planet. But not Coca-Cola Co's only money spinner. Its stable of products ranges from Sprite and Fanta to coffee and energy drinks. This company has been batting away competition and perfecting its advertising for generations.

Again, these products have been around a very long time and are trusted by consumers. They are also incredibly inflation– and recession-resistant. Once more, we can look to Coca-Cola's dividend record for proof of that. This company has one of the longest streaks of annual dividend increases around, with shareholders getting a pay rise for 69 years and counting.

I think it's fair to say that this dividend streak will continue for many decades to come. Coca-Cola stock was recently trading with a yield of 2.79%.

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Across the Pacific, the United States is home to many stocks that would supplement an ASX retirement portfolio very well. Although those stocks don't offer franking credits, they more than make up for it with unmatchable market dominance, and in some cases, incredible dividend track records.

Let's dive into three.

Three US dividend stocks to boost an ASX retirement portfolio

Procter & Gamble Inc (NYSE: PG)

Procter & Gamble isn't a household name in Australia. However, it is the company behind a plethora of household brands that are likely in your cupboards right now. These span from Fairy dishwashing liquid and Oral-B toothpaste to Gillette razors and Pantene shampoo.

It goes without saying that these are some of the most well-known household names on the planet. And they are all made by this dominant multinational.

Procter & Gamble can also boast one of the best income track records in the world. This US dividend stock has increased its annual dividend every year for 69 consecutive years. That's a feat unheard of on the ASX. If that doesn't make this stock a contender for a retirement portfolio, I don't know what would.

McDonald's Corp (NYSE: MCD)

Next up, we have a company that needs no introduction. McDonald's is one of the most recognisable brands across the world, with only a handful of countries not hosting at least one set of golden arches.

McDonald's pioneered the fast-food business model, and 70 years later, it remains a leader in its space. This company is particularly valuable as a dividend share, given McDonald's recession-resistant nature and top-notch real estate portfolio. Those characteristics make for a good start if we are looking for a dividend stock to fund a long retirement.

But McDonald's also offers a stellar dividend track record. Although it's not quite on the level of Procter & Gamble, this company has increased its dividends for 48 consecutive years.

Microsoft Corporation (NASDAQ: MSFT)

Finally, we have a company that is not well-known as a dividend payer. Even so, Microsoft has been paying out dividends for decades and has been increasing them at a rapid clip to boot. Although it currently trades on a yield well below 1%, its last dividend increase represented a 10.67% boost over what shareholders received over the previous quarter.

Furthermore, its average annual increase over the past five years has been 10.23%.

If Microsoft maintains this rate (which is arguably likely, given its continuing profit growth), this US stock could become a valuable addition to a retirement portfolio, particularly for those with decades of retirement ahead of them.

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That's understandable. After all, property investing is the great Australian obsession. And the franking credits that ASX shares pay out are particularly lucrative for retirees and anyone who has their superannuation fund in pension phase.

However, I think it is a mistake for anyone with an SMSF to ignore what is on offer over on the US stock market.

The United States houses some of, if not most of, the best companies in the world. Having a slice of that action working towards your retirement can only be a good thing. At least in my view. So today, let's talk about five US stocks that I think anyone with an SMSF needs in their portfolios.

5 US stocks to consider for an SMSF

Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)

First up, we have the Google-owner Alphabet. Everyone knows the dominance of the Google Search engine, one of the most popular tools on the internet. This simple gateway underpins this company's globally-dominant advertising business, and underpins many of Alphabet's other products, including Google Maps and the Chrome browser.

Alphabet's investment in artificial intelligence (AI), including through its popular Gemini platform, is, in my view, setting the company up well for continued dominance.

Mastercard Inc (NYSE: MA)

Mastercard is another well-known name that I think will be a valuable addition to any SMSF. As almost all Australians would know, the world is transitioning away from cash payments and towards electronic funds transfers.

Mastercard is a direct beneficiary of this, with its shares delivering breakneck returns for years now. With many emerging markets still in the infancy of this trend, I think Mastercard is poised to enjoy several decades of strong growth.

Microsoft Corporation (NASDAQ: MSFT)

Back to another member of the 'Magnificent 7' now, Microsoft is another company that I think is primed for continued success. This technology giant's strength comes from its diversity.

For one, its popular Windows and Office platforms continue to see enduring success. But Microsoft is also emerging as an AI leader thanks to Copilot. Additionally, it is also a gaming heavyweight, thanks to its Xbox line and recent acquisition of Activision-Blizzard. In my view, Microsoft is an educated bet on the future, and worthy of a place in any SMSF.

Procter & Gamble Inc (NYSE: PG)

Turning to a slightly more 'boring' company, at least in the eyes of many, we have consumer staples titan Procter & Gamble. This stock is the name behind many famous household brands. These include Pantene, Old Spice, Gillette, Oral-B and Fairy.

The beauty of these products is that people tend to buy them in all economic conditions. That makes Procter & Gamble a very defensive US stock for an SMSF. Given that defensiveness is a trait valued by many retirees, this company is arguably a perfect fit for their retirement funds.

McDonald's Corporation (NYSE: MCD)

We could make a very similar argument for our final SMSF stock – the world-famous McDonald's. McDonald's has been a pioneer and market leader in fast food ever since its inception in the 1950s.

Today, it is one of the most recognised brands on the planet and owns what could arguably be described as the world's best property portfolio. Despite its relatively long history, this company continues to innovate and attract legions of customers, who tend to flock through the Golden Arches regardless of what the overall economy is doing.

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That's why exchange-traded funds (ETFs) are such a great option for beginners.

They offer instant diversification, exposure to high-quality businesses, and a simple way to start an investment journey.

But which funds could be top picks for a beginner? Let's take a look at three ASX ETFs that could be perfect for anyone taking their first steps in the share market.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The first ASX ETF for investors to look at is the Betashares Nasdaq 100 ETF. This hugely popular ETF gives investors exposure to some of the most innovative and valuable stocks in the world. Its portfolio includes U.S. technology leaders such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Nvidia (NASDAQ: NVDA).

For beginners, the Betashares Nasdaq 100 ETF is appealing because it captures the growth potential of sectors like cloud computing, artificial intelligence, and digital payments in a single trade. Rather than trying to pick which U.S. tech stock will be the winner, you can own them all. And that's never a bad idea!

Betashares Global Quality Leaders ETF (ASX: QLTY)

Another ASX ETF for beginners to consider is the Betashares Global Quality Leaders ETF. It focuses on stocks with strong balance sheets, stable earnings, and high returns on equity.

Essentially, this means it invests only in the world's best-run businesses. This includes global names such as Adobe (NASDAQ: ADBE), Roche Holding (SWX: ROG), and Procter & Gamble (NYSE: PG).

For new investors, the Betashares Global Quality Leaders ETF provides exposure to a broad mix of industries across different countries, reducing risk while targeting consistent long-term growth. It was recently named as a fund to consider buying by the team at Betashares.

Vanguard Australian Shares Index ETF (ASX: VAS)

Finally, the Vanguard Australian Shares Index ETF is one of the most popular ETFs on the ASX, and for good reason.

It tracks the top 300 shares in Australia, giving investors exposure to household names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woolworths Group Ltd (ASX: WOW).

For beginners, the Vanguard Australian Shares Index ETF is a simple way to build a strong foundation in the local market. It is low cost, widely diversified, and designed to mirror the performance of the broader Australian economy.

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The US is, quite simply and indisputably, home to most of the best companies in the world. Think about the goods and services we all use on a daily basis in the workplace. Whether it be Microsoft's Office, Teams or Windows, Adobe's Photoshop or Alphabet's Google Search or YouTube, these products are at the forefront of workplace productivity. And they are all owned by US stocks. It's a similar story at home. Chances are, most readers have some Colgate toothpaste, Gillette razors, Fairy dishwashing liquid or Coca-Cola sitting on a shelf somewhere as we speak.

ASX shares are great, but it is the US markets that really offer investors a chance to own a slice of the best businesses in the world. At least in my view.

So with that in mind, here are ten US stocks that I would buy for my self-managed superannuation fund (if I had one, that is) today.

10 US stocks I would pick for a superannuation fund today

Starting off, let's go for Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), and Amazon.com Inc (NASDAQ: AMZN). These three members of the 'Magnificent 7' are all dominant in their own spaces. Microsoft has an impressive array of workplace software, which we touched on above. Together with LinkedIn, they form an indispensable part of many workplaces today, which I don't see changing anytime soon. Additionally, it has a large presence in the gaming space with its Xbox brand.

We could say the same for Alphabet. It's hard to overstate how valuable Google Search is to everyday work and life. With a near monopoly on the global search market, Alphabet is a tried-and-true winner at this point. YouTube is also incredibly popular, as is the Gemini AI platform and Google Cloud.

E-commerce titan Amazon is also a sure bet for a superannuation fund in my view. Amazon is globally dominant, with its sprawling online marketplace offering an ever-increasing range of products. This company is also a leader in backend cloud services through its AWS platform, which makes up an increasingly large portion of the company's profits. Amazon is the only company on this list that doesn't pay a dividend. But I think it will start soon, which is enough to get it on this list.

Adding some more US tech stocks 

Continuing the 'Magnificent 7' tech theme, I think NVIDIA Corporation (NASDAQ: NVDA) is another stock worthy of inclusion in a super fund. Nvidia has the potential to grow at an impressive pace, despite its US$4 trillion size. Being the leader in chip and artificial intelligence hardware is a license to print money in 2025, and Nvidia has proven it can do so.

Moving outside the Magnificent 7 now, let's talk about Mastercard Inc (NYSE: MA). Mastercard is one of those companies that doesn't make headlines too often, but has still been growing at a healthy pace for many years now. The global shift to cashless payments continues to march on, and Mastercard is a prime beneficiary of this. This is a phenomenal 'set-and-forget' stock to buy for a super fund.

Some consumer staples stocks for a super fund

As is our next company, the famous Coca-Cola Co (NYSE: KO). Coke is one of the most successful companies of all time, and given the sheer volume of drinks that it continues to sell, it looks set to remain so. People simply love Coca-Cola, as well as Sprite, Fanta, Mother and the myriad of other drinks in this company's stable. 

One of Coca-Cola's most famous backers is the legendary Warren Buffett, whose company, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) is our next stock. Although Berkshire is famous for its massive historical returns, there is an elephant in the room – Buffett's impending retirement. Although the 95-year-old will step down from Berkshire at the end of this year, I think Buffett has set the company up for generations of success, thanks to Berkshire's massive portfolio of high-quality businesses.

Another company that Buffett has invested in before is Procter & Gamble Inc (NYSE: PG), which is our next US stock worth discussing.

Brand power

This company is the business behind the Gillette and Fairy names we discussed earlier, as well as other popular household brands like Oral-B, Tide, Pantene, Old Spice and Vicks. These products are all life essentials, and their brands command a lot of goodwill and trust right around the world. I can't think of better attributes that a US stock can offer a superannuation fund.

Continuing with the consumer staples theme, Walmart Inc (NYSE: WMT) is another US stock that would do well in a super fund. Walmart is a dominant supermarket chain in the United States, with a growing international presence, too. It has enduring popularity amongst consumers thanks to its highly competitive prices. 

In my opinion, it is highly likely that Walmart will continue to be the first choice of many Americans when it comes to stocking their households. As such, it's a company that I regard as a rock-solid, buy-and-hold investment.

Finally, let's talk about a company we all know and may or may not love. McDonald's Corp (NYSE: MCD) is one of the most famous brands in the world, and is available almost anywhere in the world. Its logo and products have become part of popular culture, and remain enormously popular wherever you go. That makes this US stock a great buy for investors worried about inflation, recessions or other kinds of economic problems.

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US stocks may not offer the large upfront dividend yields and franking credits that their ASX counterparts can. However, that doesn't mean they are useless when it comes to dividends. There are many things to love about American companies in this regard.

For one, they tend to pay dividends every quarter, rather than the six-month interval that we are used to. For another, many US stocks boast dividend increase streaks that would make an ASX share blush. To illustrate, there are more than 50 US stocks that have a 50-year-and-counting streak of delivering annual dividend pay rises.

Here on the ASX, we only have one that has hit 27 to date.

 So with this in mind, here are three US stocks that I own for dividend income.

Three US stocks that I bought for big dividend income

McDonald's Corporation (NYSE: MCD)

McDonald's is a company that needs no introduction in Australia, despite its absence from the ASX. Its logo and products are ubiquitous in popular culture.

 McDonald's isn't quite at a 50-year streak with its payouts just yet. But it's pretty darn close at 48. This company has grown its shareholder payouts by about 7.3% per annum over the past five years.

For me, McDonald's is one of those businesses that will always do well. As such, I keep its shares in my portfolio what the hope, and expectation, that those dividends will keep increasing for at least another 48 years.

Alphabet Inc (NASDAQ: GOOGL)

Next up is Alphabet, the owner of Google.

Now, Alphabet doesn't quite have the same level of dividend prowess that McDonald's can boast of. In fact, it only paid out its inaugural dividend last year, despite having the capacity to do so for more than a decade prior to that.

Even so, it has hit the ground running, delivering a 5% increase to its quarterly dividend in 2025. Given Google's complete domination of the Search category around the world, as well as Alphabet's other ventures, including YouTube, Gemini and Waymo, I have complete confidence that this stock will be a dividend powerhouse one day.

Procter & Gamble Inc (NYSE: PG)

Our final US stock for today might seem a little boring. But in the world of dividend investing, I think boring is usually good.

You might not have heard of Procter & Gamble. But you almost certainly have some of this company's products in your house as we speak. This company owns a stable of popular household brands. These range from Tide laundry powder and Pantene shampoo to Fairy dishwashing liquid and Gillette razors.

These brands are all household staples, and have stood the test of time. That makes them, in my view at least, almost impervious to economic shocks like inflation and recessions.

This is evident in Procter & Gamble's dividend track record. This US stock has grown its annual dividend for a whopping 68 years in a row. Over the past five years, that growth has averaged 6.07% per annum, well above the rate of inflation. Again, this is a stock that I am happy just to have in my portfolio for the rest of my life.

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American companies are required to report their latest earnings every three months. That stands in stark contrast to the ASX. Here, six-month reporting periods are the norm.

Thanks to this quarterly schedule, there is always more news and more numbers to digest. There are also more share price swings and roundabouts on the US markets than there tend to be here in Australia.

It's quite an exciting period to be sure. Yes, it's always interesting to see how the likes of Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), or Woolworths Group Ltd (ASX: WOW) are faring. But I personally find it far more fascinating to take a look under the hood of companies like Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Tesla Inc (NASDAQ: TSLA), Coca-Cola Co (NYSE: KO), and Netflix Inc (NASDAQ: NFLX).

As it happens, those four companies are set to reveal their updated books over the next fortnight.

Of those four stocks, Netflix is the first, with earnings set to be unveiled on Thursday, July 17, this week.

Coca-Cola's numbers are due out on Tuesday, 22 July.

Alphabet and Tesla will report the next day.

I'm excited to take a look at all four of these names. As a Coke shareholder, I'm interested to see how this holding has fared over the three months to 30 June.

Ditto with Alphabet. Much has been made of the supposed threats facing this company, given its primary breadwinner – Google Search – is facing competition from AI platforms like ChatGPT.

Some other US stocks I'll be watching this earnings season

But I'll also be watching companies that can be viewed as barometers of the US economy. For example, major American bank stock JP Morgan Chase & Co (NYSE: JPM) is due to report its earnings on Tuesday, 15 July.

Those might just give us an invaluable insight into the health of the US economy. This is arguably crucial at this juncture, as the effects of the Trump Administration's economic policies (tariffs and the like) are still uncertain.

Other 'bread-and-butter' companies might also be useful in this endeavour. That's why I'll also be keeping an eye on Johnson & Johnson (NYSE: JNJ), Procter & Gamble Inc (NYSE: PG), Visa Inc (NYSE: V), and Starbucks Corp (NASDAQ: SBUX).

Say these companies begin discussing dropping consumer sentiment or rising costs, thanks to the effects of the new tariffs. This could be something of a canary in the coal mine for the American economy, and it could have ASX implications.

So, over the next few weeks, I'll be keeping a weather eye on the American horizon as some of the world's biggest and most influential stocks reveal their latest numbers. It should make for some interesting reading.

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According to CNBC's Berkshire portfolio tracker, Buffett, as of 31 March, has US$347.7 billion in cash and cash-equivalent investments ready to go at Berkshire. That cash pile is worth more than the combined public stock portfolio of Berkshire right now (although not if combined with its private, unlisted investments). It's also the highest cash position Berkshire has ever had. Not a bad problem to have, all things considered.

But let's move from the factual to the hypothetical. If I had a cash pile as large as Warren Buffett's, what would I spend it on?

Well, apart from a nice house and perhaps a vintage Aston Martin DB5, I would, of course, buy stocks.

The ASX shares I would buy with Buffett's cash pile

I would be happy to spend a large chunk of the pile on a simple index fund tracking ASX shares, probably the Vanguard Australian Shares Index ETF (ASX: VAS). This exchange-traded fund (ETF) offers investors exposure to the largest 300 shares listed on the ASX, weighted by market capitalisation.

This is a great hands-off investment that will likely grow in line with the broader Australian economy over time, which I find appealing as a cornerstone investment.

Following VAS, I would then opt for some additional ASX shares that balance a supply of reliable dividends with some of the ASX's most exciting growth stocks.

For dividends, I would choose a mixture of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Coles Group Ltd (ASX: COL), Telstra Group Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES), and National Australia Bank Ltd (ASX: NAB). These companies all have a strong history of providing hefty and steadily rising dividends, which is a trait Buffett himself often looks for.

I would add investments in TechnologyOne Ltd (ASX: TNE), REA Group Ltd (ASX: REA), and Xero Ltd (ASX: XRO) for some growth exposure too.

Never bet against America

But I wouldn't just stick with ASX shares. Warren Buffett himself has expressed his belief that the US markets, and the companies that reside on them, are the world's best. As such, I would probably invest more of that enormous cash pile into US stocks than those on the ASX.

My top priorities would be the companies that are leaders in their fields and have a long history of delivering for shareholders. I would start with the magnificent seven stalwarts Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), and Microsoft Corporation (NASDAQ: MSFT). I think these names are the best that the US currently has to offer, and have long growth runways still ahead of them.

Then, I would add quality names like Mastercard Inc (NYSE: MA), Netflix Inc (NASDAQ: NFLX), American Express Inc (NYSE: AXP), and Costco Wholesale Corp (NASDAQ: COST).

Perhaps I would also consider Caterpillar Inc (NYSE: CAT), McDonald's Corporation (NYSE: MCD), and Procter & Gamble Inc (NYSE: PG).

With these stocks, which range from growth engine companies like Mastercard to consumer staples fortresses like Procter & Gamble, I think I would have a portfolio that could look after my family's financial interests for the rest of my days.

Shame about the lack of a Buffett-style cash pile, though.

.

The post If I had a big cash pile like Warren Buffett, here's how I'd spend it in 2025 appeared first on The Motley Fool Australia.

There are officially 11 different sectors that an ASX share can be classified into. Those 11 sectors are:

• Energy
• Materials
• Indistrials
• Consumer staples
• Consumer discretionary
• Healthcare
• Fiancials
• Information Technology
• Communication services
• Utilities
• Real Estate

Some investors break down these sectors even further. For example, it is common for investors to extract gold stocks from broader materials (or mining) shares, as gold companies tend to dance to the beat of a different drum. But on the whole, these chosen 11 sectors divvy up the ASX quite effectively.

Most investors have a preference for which companies they like to invest in. Today, let's discuss the two that I personally gravitate towards and why.

Which ASX sectors do I like to buy stocks from?

ASX consumer staples shares

First up, we have the consumer staples sector. Consumer staples shares are companies that tend to sell goods and services that we need, rather than want, to buy. These include food, drinks, and other household essentials. They also include companies that produce or sell alcohol and tobacco.

The ASX's two most prominent consumer staples shares are Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW). But the likes of Bega Cheese Ltd (ASX: BGA), Endeavour Group Ltd (ASX: EDV), and Metcash Ltd (ASX: MTS) are also popular.

As the name implies, consumer staples companies tend to have highly defensive cash flows and dividends that are relatively protected against cyclical economic problems like inflation and recessions. It's for this reason that I like to invest in these companies at the right prices. In my personal portfolio, you'll find Endeavour, as well as a few US consumer staples stocks like McDonald's, Procter & Gamble, and Coca-Cola.

Technology shares

Information technology shares, or tech stocks for short, are another sector I like to trawl for my next investment. This may be a tad cliched, but it's still my belief that the most innovative, exciting companies on the ASX are currently in this sector. Think of names like TechnologyOne Ltd (ASX: TNE), Xero Ltd (ASX: XRO), WiseTech Global Ltd (ASX: WTC), and Block Inc (ASX: XYZ).

Tech stocks have a unique advantage on the ASX in that they can often scale at rates that are impossible for companies in other sectors. To illustrate, let's take Xero's accounting software. This software might be expensive to develop. But once it's ready for market, it doesn't cost Xero much to sell it.

If the company sells 20% more subscriptions in a given year, its costs of doing business will barely rise, allowing all of that extra revenue to flow straight to the bottom line. Contrast that with, say, a car company, whose costs are directly proportional to how many vehicles it manufactures.

Unfortunately, there aren't too many ASX tech shares in my portfolio at present, as I haven't been able to buy the stocks I'd like to at the right prices lately. However, I do own a few US tech shares, including Microsoft, Alphabet, Duolingo, and Netflix.

The post My 2 favourite ASX sectors to invest in appeared first on The Motley Fool Australia.

At the same time, though, many ASX investors know that stock market crashes can be rare opportunities to buy shares of our favourite companies at bargain-basement prices.

These share market 'sales' don't come around too often. So when they do, it can be a great opportunity to pick up a rare steal.

Now, neither I nor anyone else knows when the next stock market crash will occur. It could be next month, next year, or next decade. But just in case, I keep a watchlist handy for when the next crash does come.

This watchlist contains shares that I might not necessarily like at current prices, but I would happily scoop up at a discount if the markets plunged.

Last month, I went through some of the ASX names that appear on this list. But today, I will discuss some American stocks on the S&P 500 Index that I would also like to increase my holdings of.

My S&P 500 wishlist for the next stock market crash

First on my list would be artificial intelligence (AI) and semiconductor stock NVIDIA Corporation (NASDAQ: NVDA).

Like most investors, I have watched with awe as this company has exploded higher in recent years, thanks to its suite of exciting, future-facing products.

I do think Nvidia shares have gotten way too expensive (up around 180% over the past 12 months). But if this exciting company takes a major haircut in the next stock market crash, I would love to initiate a position.

The same goes for fellow AI stock Microsoft Corporation (NASDAQ: MSFT). We all know Microsoft for its Windows operating system and popular Office suite of productivity programs. You might also be familiar with its Xbox gaming division, which the recent acquisition of Activision Blizzard has bolstered.

But I'm mostly excited about Microsoft thanks to its investments in AI. This company already boasts a major AI investment with its stake in ChatGPT-owner OpenAI.

I'd happily buy any of the magnificent seven tech shares on the S&P 500. But Nvidia and Microsoft top the list. Perhaps along with Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL).

Alphabet owns one of the most monopolistic businesses in the world in Google Search, not to mention other popular products like YouTube. So yes, Alphabet is another S&P 500 share I'd love to own more of at the right price.

 A consumer staples giant on my buy list

But my final S&P 500 share on the watchlist is something a little different. Procter & Gamble Co (NYSE: PG) is not exactly a household name in Australia. But chances are you have probably heard (and bought) several of their prominent household brands.

This consumer staples giant counts razor brand Gillette, Fairy dishwashing products, Tide laundry powder, Oral-B toothpaste and shampoo brands Pantene and Head & Shoulders in its stable. Amongst many other global brands.

Procter & Gamble is one of those companies that is recognised for its high quality by most investors. It has got a 67-year streak of raising its dividend, after all.  As such, its shares don't often trade at a discount. I already own a stake in this company, but if the S&P 500 takes a big haircut, I would love to buy up some more stock.

The post These S&P 500 stocks are on my watchlist for a stock market crash appeared first on The Motley Fool Australia.

As such, it is prudent to be prepared for the next stock market correction. That's both mentally and with our actual ASX share portfolios.

I'd like to think my own portfolio is ready for the next inevitable stock market correction. Here's why.

Preparing financially and mentally

For full disclosure, I actually don't believe in 'preparing' a portfolio for a stock market correction. Basic stock market investing history tells us that corrections, while inevitable, are also relatively rare. The markets tend to go up far more often, and for far longer, than they correct or crash.

As such, I think it's logical to build a portfolio that will do well when markets are rising, and not one that might fall less than the market when there is a correction happening.

Say the share market rises for four years before undergoing a correction in the fifth year. If you spend those first four years preparing for the crash, you are potentially sitting out of the markets at exactly the time that makes investing worthwhile in the first place.

Because of this, I believe that preparing mentally for a market correction is a lot more important than preparing one's portfolio. The worst decisions investors make usually come when they are panicking in the midst of a crash.

I feel comfortable that my share portfolio is ready for a crash today for two reasons.

How I'm preparing my ASX share portfolio for the next stock market correction

Firstly, I believe my portfolio is made up of quality companies that will not only survive a stock market correction but will thrive and come out even better on the other side. I focus a lot of my investments in the consumer staples sector. Some of my shares in this area include Endeavour Group Ltd (ASX: EDV), Procter & Gamble, Coca-Cola Co, and the iShares Global Consumer Staples ETF (ASX: IXI).

These companies (and the exchange-traded fund (ETF)) tend to be resistant to all forms of economic maladies, including recessions and inflation. So I'm not too worried about how they will fare if a future recession sparks a market correction.

Secondly, I'm confident in the share prices I bought almost all of my investments at. The biggest protection you can have in your portfolio is buying companies at "prices that make sense", as the legendary Warren Buffett would say.

Sure, you can't always get the best price for your buys. But as long as they are reasonable, and you are paying for a quality company, this alone can help prepare your portfolio for the next crash.

I do still have some of my portfolio in cash and in other defensive assets such as gold that might help cushion my portfolio from a market downturn. However, the vast, vast majority is still invested in shares. But I'm still not worried about the next stock market correction. And I hope you feel the same about your own portfolio.

The post How my ASX share portfolio is ready for a stock market correction appeared first on The Motley Fool Australia.

The reality is that even professional investors can't consistently do better than the S&P/ASX 200 Index (ASX: XJO).

But there is a neat little trick one could pull to assist.

Here's the first way to beat the index

The strategy is to invest in ASX dividend shares.

Many Australians already buy and own dividend stocks for what they're famous for — providing income.

But with the ASX bursting with high yield equities, they can also be used effectively to grow capital faster than the market index.

The idea is that if the dividends are immediately reinvested, then the overall portfolio grows just as well as growth stocks.

To demonstrate, check out how the S&P/ASX 200 Index Accumulated (ASX: XJOA) has done over the years.

That index, which is the ASX 200 with dividends immediately reinvested, stands at an impressive 49.84% gain since January 2019.

Not bad in four years including the COVID-19 and post-pandemic market corrections.

And this is how you turbocharge the portfolio

However, the ingredient that will supercharge a stock into the market-beating zone, according to The Motley Fool US' Matthew DiLallo, is to pick companies that grow their dividend over time.

"That combination of a rising dividend income stream and price appreciation from earnings growth has historically yielded market-beating total returns."

There are some sensational examples of stocks that consistently expand their dividends over time in the US.

"Three of the most well-known among this dividend royalty are Coca-Cola Co (NYSE: KO), Procter & Gamble Co (NYSE: PG), and Johnson & Johnson (NYSE: JNJ). 

"Coca-Cola and Johnson & Johnson notched their 61st straight years of dividend growth in 2023, while Procter & Gamble is up to 67 consecutive years."

Here's an ASX example

While The Motley Fool can't find any ASX shares that have such long winning streaks, there are some historically trustworthy stocks that keep pushing up their distributions.

Washington H Soul Pattinson and Co Ltd (ASX: SOL) is the classic local example. 

The investment company has raised its dividends every year since the 2000s, including through the global financial crisis and the COVID-19 crash.

The dividends are accompanied by decent capital growth too, with the Soul Patts share price rising 63% over the past five years.

One important thing to note with this strategy is that you're not necessarily going for the stocks with the highest dividend yields.

For example, Soul Patts currently hands out a 2.9% yield.

It's more about choosing quality businesses that have the best chance to grow both their valuation and dividends. 

If you bought Soul Pattinson shares five years ago at $19.90, your portfolio would be now enjoying a fully franked 4.7% dividend yield.

Such is the power of dividends.

The post The little-known secret to beating the ASX 200 appeared first on The Motley Fool Australia.

At a time when inflation is running amok, it's worth taking a lesson or two from longtime investors who've seen it all before.

Consider Warren Buffett's thoughts on the matter. When inflation was rampant in 1977, he wrote, "Our acquisition preferences run toward businesses that generate cash, not those that consume it. As inflation intensifies, more and more companies find that they must spend all funds they generate internally just to maintain their existing physical volume of business."

Not surprisingly, some of Buffett's largest and longest-held positions are excellent dividend stocks. Dividend stocks are focused on cash generation, and that protects their businesses during these inflationary periods. They also provide generous passive income. Some of the best are Coca-Cola (NYSE: KO), Kroger (NYSE: KR), and Procter & Gamble (NYSE: PG). Let's take a closer look at each.

One of the best dividend stocks on the market

Berkshire Hathaway has held shares of Coca-Cola for more than 30 years, and it currently owns 9.2% of the stock. The beverage giant makes up 6.8% of the total Berkshire Hathaway portfolio and is its fourth-largest holding.

Coca-Cola is a classic Buffett stock, mostly because of its focus on cash generation and its dividend, which is really a commitment to its own business. The company is a Dividend King, having raised its payout annually for the past 60 years -- even through the massive sales declines at the beginning of the pandemic.

While the company innovates with new products, its well-oiled business churns out cash through its core brands, giving it enough to plow back into the business while maintaining and growing the dividend. Coca-Cola's payout ratio is presently a bit high at 77%, but the company has tons of cash to cover its dividend, which is super-important to management.

KO Payout Ratio data by YCharts

Coke's shares are down slightly this year. At the current price, its dividend yields 3.1%, which should please new investors.

Big supermarkets, lots of cash

Among U.S. supermarkets, Kroger comes in third in size after Walmart and Costco Wholesale (leaving out Amazon as a different kind of business). But unlike the other two, it doesn't follow a discount model; rather, it offers a premium experience through its network of 2,800 stores.

Over the past few years, Kroger has benefited from customers spending on essentials, and it has revamped its digital channels to handle more demand. Revenue has climbed in this environment. 

It's been in the news lately as it has proposed a merger with the next-biggest U.S. supermarket company, Albertsons Companies. The deal is facing regulatory scrutiny as it would combine the two largest non-discount grocery retailers. If it does indeed go through, the newly merged company will likely overtake Costco as the second-largest food retailer in the U.S.

Buffett first took a position in Kroger in 2019. At that time, it was just getting ready to remake itself. What he might have seen then was a foothold in stability. The company paid a dividend but stopped for several decades before resuming it again in 2006, and it's now a growing a reliable dividend, as are all of the stocks on this list.

KO Dividend data by YCharts

Kroger stock is down just under 4% this year, and at this price, the dividend yields 2%.

A solid business with beloved brands

A theme through all of these stocks is a well-established company with well-loved products that bring in tons of cash. Procter & Gamble is no exception. The company owns popular brands, such as Tide laundry detergent and Bounty paper towels. It makes products that people across the globe use every day and frequently purchase.

Buffett first came to own its shares in 2005 through Berkshire Hathaway's acquisition of the Gillette razor company. Procter & Gamble is another example of a company with slow but consistent growth and the ability to keep producing sales well into the future. 

Inflation has been hitting Procter & Gamble's margins and profits, and volume was down in the company's 2023 fiscal first quarter (ended Sept. 30).

The company has been increasing some of its prices, taking the risk that some customers will head toward discount brands. But management noted that 26 of 50 global brands maintained or increased market share in the latest quarter, which was the first to really reflect high inflation.

It expects profitability to suffer in the near term and is counting on brand power to carry it through. 

The company's stock is down 21% this year, and its dividend yields 2.8% at this price.

KO Dividend Yield data by YCharts

Procter & Gamble is also a Dividend King, and it has one of the longest dividend-raise streaks on the market, at 66 years. It's as reliable as you can get for steady and growing passive income.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The best Warren Buffett stocks you can buy with huge passive income potential appeared first on The Motley Fool Australia.

From time to time, you might read about the S&P 500 Dividend Aristocrats. These companies are S&P 500 index members that have paid and raised a dividend for at least 25 consecutive years.

Those looking for total returns might scoff at dividend stocks as mature companies that have left their best growth days in the rearview mirror. But consider that the Dividend Aristocrats have collectively outperformed the S&P 500 index by an average of 0.74% annually, which creates a significant margin over the course of decades.

What's the secret to their success and what can that mean for your portfolio? Here is why every investor should at least consider adding some Aristocrats to their long-term investment strategy.

The anatomy of a dividend

Most investors know what a dividend is: Companies that have available cash will sometimes share it with shareholders. But many investors skip over the anatomy of a dividend and how it impacts a business.

For example, a dividend is a cash expense. Accounting rules can twist a lot of the financial jargon and metrics you see in a company's financials. A company like Netflix can show a bottom-line profit but generate little free cash flow simultaneously because accounting rules can affect how companies report their earnings.

NFLX net income (TTM). Data by YCharts. TTM = trailing 12 months.

A company can only pay a dividend in cash; it can borrow money to pay a dividend, but that's a losing game that never lasts long. A business that can not only pay you part of its cash profits but also keep increasing its annual payout can only do so if it's growing over the long term. You can't fake it.

Successful investing can be as simple as buying quality businesses and letting them do their magic over time. A Dividend Aristocrat often fits that bill simply because of what is entailed with paying and raising a cash expense like a dividend.

An additional level of compounding

A steadily growing business will generate capital gains as earnings grow over time, but what you can do with dividends propels Aristocrats as investments. Dividends are essential to investment returns; they made up 31% of total returns from the S&P 500 from 1926 to 2021.

You can also reinvest dividends, taking the cash and buying more shares. Those new shares don't cost you any out-of-pocket money beyond your initial investment, and will pay dividends of their own, creating a compounding effect.

PG data by YCharts.

This can have a considerable impact on your total investment returns over time. Consider a stock like Procter & Gamble, a Dividend King with 66 consecutive years of dividend increases. Investors have earned 4,720% in lifetime returns from capital appreciation since the early 1970s. That's great, but that would have nearly tripled to 12,120% by reinvesting the dividends to take advantage of compounding!

You don't need home runs to win the game

Ultimately, you don't need to find the next Amazon to have a lucrative investment journey. Derek Jeter is one of baseball's greatest players because he could consistently hit the ball year in and year out, even if it didn't often go out of the park.

The same applies to investing. A Dividend Aristocrat probably won't make you rich overnight, but you can become wealthy by buying and holding Aristocrats as part of a diversified portfolio with a long-term outlook.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post What makes 'Dividend Aristocrats' a great investment for you? appeared first on The Motley Fool Australia.

To repurpose an old television commercial: When Warren Buffett talks, people listen. Buffett is one of the world's richest billionaires and most successful investors. Much of the investment community follows his every move, looking to bring some of the Buffett magic into their own portfolios.

Buffett's moves are particularly interesting as the U.S. faces inflation plus fears of recession. Investors generally want safety in uncertain times. And Buffett, who's seen many flavors of recession, could shed light on where to find that safety.

But Buffett doesn't buy and sell stocks based on what's happening with the economy. He's an all-weather investor -- choosing stocks that can survive all economic climates. That may be why he has 10% of Berkshire Hathaway's portfolio invested in consumer staples, a sector that's known for being recession-resistant.

Consumer staples defined

Consumer staples are essential food, beverage, household, and personal products. Examples are soda, eggs, milk, toothpaste, and detergents.

Consumer staples companies include retailers and manufacturers of these products. On the retail side, you have Dollar General (NYSE: DG), Walmart (NYSE: WMT), Costco (NASDAQ: COST), and their competitors. Consumer staples manufacturers include Procter & Gamble (NYSE: PG), Coca-Cola (NYSE: KO), and Kimberly Clark (NYSE: KMB).

Why consumer staples stocks are recession-resistant

A look at your own buying habits can demonstrate why consumer staples stocks don't tank in recessions. With inflation running hot, where have you cut back to make ends meet? You're probably spending less on things like electronics and designer clothes. You may have even canceled a streaming service or two.

But you are still buying toilet paper, deodorant, and bread, even as the prices on these goods rise. On top of that, you may have shifted some shopping to discount retailers like Walmart, in lieu of your more expensive local market.

Here's what it comes down to. People keep buying their staples. Demand for these essential goods doesn't drop off when the economy goes sideways.

Buffett's consumer staples stocks

Berkshire Hathaway owns five consumer staples stocks:

1. Coca-Cola
2. Kraft Heinz (NASDAQ: KHC)
3. Kroger (NYSE: KR)
4. Mondelez International (NASDAQ: MDLZ)
5. Procter & Gamble

Where to find consumer staples stocks for your portfolio

Buffett's consumer staples portfolio is interesting, but you don't want to run out and copy it. Even Buffett himself would tell you: A better approach is to invest in what you know -- specifically, the products, brands, and retailers that are essential to you.

This is easy to figure out, too. Look at your last grocery receipt. Cross off everything that's nonessential and see what's left. Or peek into your pantry and bathroom cabinets. Note the brands you buy repeatedly. It could be Colgate or Charmin, for example. If you see mostly generic goods, then where are you buying them?

You could also think back to the products that kept selling out during the Great Lockdown of 2020. (In my community, it was toilet paper, disinfectants, and chicken.) People stockpile the stuff they can't live without. And many of these staples are made or sold by public companies.

Spend a few minutes on this exercise, and it could reveal six or more recession-resistant stocks to consider for your own portfolio.

Recession defense, the Buffett way

Many investors use consumer staples stocks as a defensive strategy against recession. To follow Buffett's approach, though, you'd invest in defensive stocks you're willing to hold for decades. That's different from owning shares of Coke or Walmart temporarily because financial pundits are predicting recession.

In other words, play defense consistently. Manage to a risk level you can handle in all investing climates. Buffett has 10% exposure to consumer staples, for example, but you might prefer 5% or 15%. Whatever your number is, stick with it. That way, you won't be scrambling to adjust to every market shift. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Warren Buffett has 10% of Berkshire Hathaway's portfolio in this recession-resistant sector appeared first on The Motley Fool Australia.

Although the markets looked fine yesterday after the Federal Reserve raised its benchmark lending rate by three-quarters of a percentage point, it didn't take long for the panic to set back in. The Dow Jones Industrial Average lost more than 740 points today as investors digested the Fed's biggest hike since 1994 and turned their attention to the economic outlook.

The Dow closed the day below 30,000 for the first time in nearly a year and a half. Mortgage rates also soared higher, as investors grew more concerned about a potential recession and the magnitude of that recession.

The big losers on the day were American Express, Nike, and Caterpillar. While the majority of the Dow finished the day down, there were four stocks in the index that managed to survive the blood bath.

The 4 survivors

The big-box retailer Walmart (NYSE: WMT) finished the highest of any Dow stock, gaining just over 1% on the day. Over the last five days, Walmart has also managed to stay in the green despite very difficult trading conditions.

While we've heard large retailers talk about the shift away from discretionary goods in recent days, the consumer is still spending heavily on necessities such as groceries, which can greatly benefit Walmart, which now generates about 60% of its revenue from groceries.

Grocery stocks can do well in inflation because the stores can pass the higher costs onto the consumers. Walmart said earlier this year that it continues to take market share in the U.S. grocery category. The company grew grocery sales in the low double-digit percentage range last quarter.

The consumer goods giant Procter & Gamble (NYSE: PG) also managed to scratch out a gain today, with shares up roughly 0.6%. 

With brands such as Pampers, Tide, Bounty, and Gillette, among many other cosmetics and household brands, it made sense that investors shifted over to a stock like Procter & Gamble today. When there are concerns over a recession and rates are on the rise, the market will look less favorably on tech and growth stocks because they are riskier. In addition, higher rates reduce the value of their future cash flows, as well as their earnings power.

But people are still going to need paper towels, diapers, and shaving equipment during a recession, making this stock more recession-proof than others. The other two stocks that eked out a gain today were Merck and Johnson & Johnson.

Should you pile into these names?

I definitely don't hate the idea of adding some of these more recession-proof names like Walmart or Procter & Gamble to your portfolio because people are always going to need these products, making these companies potentially more durable during the volatility.   

But that doesn't mean I wouldn't also take this sell-off as an opportunity to go bargain hunting. If a recession occurs, it could end up being a mild one and recessions don't always last that long either. When looking for discounts, take a long view and focus on the business model as opposed to near-term price action. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The Dow got crushed — Here are 4 stocks that survived the bloodbath appeared first on The Motley Fool Australia.