Key Points

• Dividend stocks are a useful source of extra income.

• The best dividend stocks, however, also increase payouts over time and can build you a fortune.

• The S&P 500 index has some top-notch dividend stocks, some of which are no-brainer buys now.

• 10 stocks we like better than Medtronic ›

Dividend stocks are one of the most powerful wealth compounders. The S&P 500 (SNPINDEX: ^GSPC) index offers the perfect example. Over the past 25 years, while the S&P 500 rose by over 300%, its total returns crossed 550% thanks to reinvested dividends.

As you may guess, the S&P 500 comprises some of the best dividend stocks out there, many of which have been multibaggers and have the potential to continue being so. Here are 10 such magnificent S&P 500 dividend stocks -- trading at least 10% below their all-time highs -- to buy now and hold forever.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Johnson & Johnson: down 11.5%, yield 3.4%

Johnson & Johnson (NYSE: JNJ) is a cash-flow machine. It generated $95 billion in free cash flow (FCF) over the past five years and returned 60% of it to shareholders. The stock is also a dividend powerhouse, increasing its dividend for 62 consecutive years. Johnson & Johnson has robust financials, invests heavily in research and development, and has big plans for both its businesses, pharmaceuticals and medical technology, making it a top S&P 500 dividend stock to buy and hold.

ExxonMobil: down 11.6%, yield 3.7%

ExxonMobil (NYSE: XOM) is one of the world's largest oil and gas companies. In 2024, the oil and gas giant generated $55 billion in cash flow from operations, compared to $30 billion in 2019. ExxonMobil is a dividend behemoth with a 42-year streak of consecutive dividend increases. After its $60 billion acquisition of Pioneer Natural Resources in 2023, ExxonMobil has been targeting higher production at even lower costs and focusing on boosting its cash flows, all of which makes this magnificent S&P 500 dividend stock a buy at every dip.

Procter & Gamble: down 14%, yield 2.7%

Procter & Gamble (NYSE: PG) owns over 60 brands, most of which are household names today. Although its organic sales growth has slowed due to higher costs and weak consumer sentiment, it's just a short-term blip. Procter & Gamble is restructuring operations and targeting core earnings per share by mid- to high-single-digit percentages in the long term by exiting low-margin brands and markets. Above all, Procter & Gamble has a strong balance sheet and is a Dividend King, having increased its dividend for 69 consecutive years.

NextEra Energy: down 19%, yield 3.3%

NextEra Energy (NYSE: NEE) operates the largest electric utility in America (Florida Power & Light), which generates steady cash flows. It is also the world's largest producer of wind and solar energy, as well as a key player in battery storage, all of which are growth drivers. NextEra Energy stock has increased its dividend for over 20 years and has generated humongous returns for investors who reinvested the dividends. The global shift to renewables and a massive pipeline make NextEra Energy a no-brainer S&P 500 dividend stock to buy and hold forever.

NEE data by YCharts.

Chevron: down 19%, yield 4.8%

Chevron (NYSE: CVX) is one of the largest integrated oil companies, operating across the entire value chain, from exploration and production to pipelines, refining, chemicals, and marketing. Chevron has massive oil and gas reserves but is also growing new low-carbon businesses, such as hydrogen and renewable fuels. Chevron has increased its dividend for 38 consecutive years, making it one of the best oil dividend stocks within the S&P 500. Chevron also just won a dispute with ExxonMobil and has acquired Hess in a massive $53 billion deal.

American Water Works: down 24%, yield 2.4%

American Water Works (NYSE: AWK) is the largest regulated water and wastewater utility in the U.S., serving over 14 million customers and 18 military bases.

AWK data by YCharts.

While generating stable cash flows from these regulated and contracted businesses, American Water Works' regular investments in its infrastructure help it secure base rate hike approvals, which continue to drive its earnings, cash flows, and dividends higher. American Water Works is targeting 7% to 9% annual dividend growth for the long term, making it an incredibly safe S&P 500 dividend stock to buy now and hold forever.

Realty Income: down 29%, yield 5.6%

Realty Income (NYSE: O), a real estate investment trust (REIT), pays a dividend every month and has increased it for 110 consecutive quarters now. The company owns over 15,000 properties globally and leases them under triple-net leases, where the tenants bear most of the costs. So, Realty Income enjoys high margins, and its diverse portfolio enables the company to navigate economic challenges. Realty Income's commitment to paying a monthly and growing dividend makes it one of the top 10 dividend stocks to double up on now and hold.

Oneok: down 29%, yield 5%

Oneok (NYSE: OKE) is one of the largest energy infrastructure companies in the U.S., with a network of pipelines spanning 60,000 miles. Three big acquisitions over the past couple of years or so, including that of Magellan Midstream Partners, combined with organic expansions, should help Oneok steadily grow earnings and meet its goal of increasing the annual dividend by 3% to 4%. When coupled with a 5% yield, Oneok makes for an appealing S&P 500 dividend stock to buy and hold.

Nucor: down 30%, yield 1.7%

Nucor (NYSE: NUE) is America's largest and most diversified steel company. It is also vertically integrated, meaning it sources the bulk of its raw material in-house. That's a huge competitive advantage to have in a commodity business and one of the key factors behind Nucor's strong financials and dividend growth. Nucor aims to return at least 40% of its earnings to shareholders, has increased its dividend for 52 straight years, and is primed to benefit from President Donald Trump's steep tariffs on steel imports.

NUE data by YCharts.

Medtronic: down 33%, yield 3.3%

With revenue of $33.5 billion for the fiscal year that ended April 25, 2025, Medtronic (NYSE: MDT) is the world's largest medical device manufacturer. It offers a wide range of products across cardiovascular, neuroscience, medical-surgical, and diabetes care and uses artificial intelligence and robotics technologies to build better products. Medtronic plans to divest its diabetes business into a separate company to unlock more value for shareholders. Meanwhile, it is only two dividend raises away from becoming a Dividend King, making this S&P 500 dividend stock a solid buy.

Should you invest $1,000 in Medtronic right now?

Before you buy stock in Medtronic, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Medtronic wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, NextEra Energy, and Realty Income. The Motley Fool recommends Johnson & Johnson, Medtronic, and Oneok and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.

Are you just as afraid of a market pullback right now as you are of missing out on upside? If so, you're not alone. This is a confusing environment for investors. Major names like Nvidia and Home Depot are sending mixed messages, while the market itself seems to be waiting for more clarity about tariffs and the Trump administration's trade war.

There are some tickers with bullish backstories, though, that are bigger than any environmental or economic backdrop. You just have to look a bit off the beaten path to find them.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

If you've got $1,000 -- or any other amount of money -- lying around available to invest, here are three solid prospects to consider.

CRISPR Therapeutics

Biotech stocks can be tricky investments to handle. Oftentimes, you're betting on a potentially game-changing premise well before it's profitable, or even before there's a marketable product. That's obviously risky. But the potential upside can be tremendous.

CRISPR Therapeutics (NASDAQ: CRSP) is not yet profitable, but the underlying science that makes the drugs it's currently developing possible holds enough promise to eventually get the company out of the red and into the black.

CRISPR Therapeutics specializes in gene editing. Company co-founder Dr. Emmanuelle Charpentier developed a way to cut a strand of damaged DNA and then force the genetic code's own built-in repair process to fix what's broken. While CRISPR's Casgevy (for the treatment of sickle cell disease and beta thalassemia) is its only approved drug based on this science, this biotechnology has a range of potential applications. Treating cancer and autoimmune diseases is arguably the biggest.

That any drugs based on this science have been approved bodes well for the concept, and CRISPR's got a total of five different clinical trials underway right now. Those are what most interested investors are eyeing. Ditto analysts, who collectively sport a consensus price target of $77.38, more than twice the stock's present price.

So why are CRISPR Therapeutics shares still drifting lower from their 2021 peak, knocking on the door of new 52-week lows? That's just part of the challenge of buying, holding, and even selling biotech stocks. Sometimes they reflect potential revenue and earnings too soon. Other times, investors lose interest when they've waited a little too long for results.

Don't overthink it, though. Just take a step back and recognize that analysts expect revenue to jump from $50 million this year to nearly $200 million next year and then to more than double again the year after that. This explosive growth should come on the heels of at least one more drug approval, although more than one approval is just as possible.

This growth will presumably stir up a bullish tailwind for the stock.

Palo Alto Networks

There's no sensational singular bullish argument for owning a stake in Palo Alto Networks (NASDAQ: PANW). There are dozens of solid reasons, though.

On the unlikely chance you've never heard of it, Palo Alto is a cybersecurity company. Firewalls, VPNs, threat detection, and breach response are all in its wheelhouse. There's nothing unique about its offerings, even if the company is the biggest and best-known name in the cybersecurity industry, that's more than reached full maturity.

That's not necessarily a bad thing, however, given the nature of this business.

Think about it. As the world uses computers more and more, it's going to need more and more cybersecurity solutions. That's why Precedence Research believes the global cybersecurity market is set to grow at an annualized pace of 12.6% through 2034. Palo Alto's top line is expected to slightly outpace this industry growth based on the consensus analyst forecast, but only slightly. There's little doubt that it will be able to leverage its size to achieve at least its fair share of this growth, though. Again, cybersecurity is a business that's unlikely to go away.

Don't tarry if you're interested. While this stock looks a bit frothy following its big rebound from its March low, it's still only priced around its early-2024 peak. The lack of net forward progress since then is sure to be catching the eye of many would-be buyers.

NextEra Energy

Finally, add utility name NextEra Energy (NYSE: NEE) to your list of stocks to buy with an idle $1,000.

Utility stocks are usually anything but exciting. That's because the highly regulated industry is anything but a high-growth one, and the business itself hasn't changed much since its inception. Ditto its individual companies. In many cases, these outfits are not only working with the same infrastructure they were working with decades ago, but they're also grappling with legacy capital structures and mindsets.

Not NextEra Energy, though. Although its roots are traditional, over the course of the past several years, this organization has made a deliberate effort not just to embrace cleaner, renewable energy sources, but also to evolve its utility business in a way that makes sense in the modern era. As of the end of last year, more than half of its power production comes from renewables like wind and solar, while roughly one-third comes from natural gas. Another 8% is nuclear, which President Donald Trump just gave a boost to last month with four executive orders aimed at revitalizing the U.S. nuclear energy sector.

Notice fossil fuels aren't part of the mix.

And yet, even though the company is spending more on energy infrastructure than any other utility outfit, it's still profitable.

This utility outfit is largely future-proof. That is to say, even though how utilities will be regulated and restricted by future emissions mandates isn't completely clear right now, all of NextEra Energy's future power production will likely satisfy whatever requirements await.

There won't be any explosive growth from NextEra, in the near or distant future. There should be plenty of reliable growth here, however, regardless of the economic environment.

There's also a respectable amount of reliable recurring income. Newcomers will be stepping into this stock while its forward-looking dividend yield stands at just under 3.4%. Not bad.

That's based on a dividend, by the way, that's more than doubled over the past 10 years and been raised every year for well over two decades. Even if dividend income isn't your big goal right now, this is reliable cash flow that you can use to buy stocks as other opportunities arise.

Should you invest $1,000 in Palo Alto Networks right now?

Before you buy stock in Palo Alto Networks, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palo Alto Networks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics, Home Depot, NextEra Energy, and Nvidia. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Shares of solar stocks, including rooftop solar provider Sunrun (NASDAQ: RUN), renewables-focused utility NextEra Energy (NYSE: NEE), and renewable power provider AES Corp. (NYSE: AES), plunged on Thursday, falling 40%, 9.1%, and 5.2%, respectively, as of 12:50 p.m. ET.

Solar stocks took it on the chin -- especially residential rooftop solar providers -- after the "big, beautiful" tax and spending bill passed the Republican-controlled House of Representatives this morning.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Even worse than feared for solar and renewable energy

While it was expected that the bill would phase out some of the Inflation Reduction Act's renewable energy tax credits over time, the House bill was actually even worse than feared for the solar industry. The bill now phases out most clean-energy tax credits for utility projects either begun more than 60 days after passage or placed into service after 2028. The bill also restricts foreign entities' involvement in renewable energy projects, making it even more difficult for developers to deploy projects within the tight time frame.

This morning's bill was more restrictive than the version of the phaseout included in the House Ways and Means Committee version released May 12. Hence the reaction from utility solar and renewable companies like NextEra and AES. For instance, AES has 11.7 gigawatts of contracted energy projects that have been signed but are not yet operational, and only half are currently under construction. So, it's unclear how much of that backlog may be at risk.

But the bill was also much, much more dire for residential rooftop solar companies, throwing the entire industry into chaos. According to an earlier version of the bill, the tax credit for installing rooftop solar would be phased out for those who owned their systems, but would stay in place for homeowners and business owners who leased their systems -- which applied to the vast majority of rooftop solar deployments.

However, the bill that passed this morning also rolled back the tax credit for leased systems, which one Wall Street analyst called "disastrous" for the rooftop solar industry. Another claimed the bill as passed would mark "the end" of the U.S. rooftop solar industry as it is currently constructed.

That's why Sunrun, whose entire business is built around residential solar, is down a stunning 40% in a single day.

In addition to the phased-out tax credit, Sunrun also has exposure to imported components and modules, which will also now be taxed by the administration's recently implemented tariffs and could be affected by foreign partnership restrictions in the bill. Sunrun imports about 50% of its solar panels, and even its domestically purchased batteries and other components have exposure to Chinese supply chains. So, the recent tariffs and other limits on foreign components and partnerships in the bill could make things doubly bad for Sunrun.

But the bill isn't law yet

It should be noted that the One Big, Beautiful Bill has only passed the House, and by a single vote. The bill will now head to the Senate, where many Senators have expressed reservations about the current House provisions. So, investors should expect more Washington dealmaking and negotiation in the weeks ahead.

However, the passage of this bill with these worse-than-expected provisions is still a big net negative for any domestic solar player. Interested or current investors need to hope that some of the credits will be reintroduced in the Senate version and then passed after the two bills are reconciled.

As of now, I would stay away from solar-exposed stocks, especially rooftop solar names, until the dust settles.

Should you invest $1,000 in Sunrun right now?

Before you buy stock in Sunrun, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sunrun wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $807,814!*

Now, it’s worth noting Stock Advisor’s total average return is 962% — a market-crushing outperformance compared to 169% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.

The risk has been increasing that the United States will have a recession in 2025 or within the next year, according to top Wall Street firms and economists. Recession risk has risen sharply over the last few months, largely due to the trade war and the potential for tariffs to hurt U.S. (and global) economic growth and ignite inflation.

Below I'll explore the current probability of a near-term recession and what stocks could hold up best during the next recession.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

What's the probability of a near-term recession in the United States?

Many of the probability estimates from experts that the U.S. will have a recession in 2025 or within one year fall within the 40% to 60% range, though there are some credible sources with estimates that are lower and higher. In early April, Wall Street company Goldman Sachs boosted its one-year recession-risk probability to 45% from 35%, which it had previously increased from 20% in late March.

Also in early April, JPMorgan pegged the odds of a U.S. recession in 2025 at 60%, up from its early March forecast of 40%. In mid-April, the investment bank reiterated its 60% probability. It said that President Donald Trump's 90-day pause on his April 2 country-specific so-called reciprocal tariffs "reduces the shock to the global trading order, but the remaining universal 10% tariff is still a material threat to growth, and the 145% tariff on China keeps the probability of a recession at 60%."

Which categories of stocks should hold up best during the next recession?

Certain categories of stocks tend to perform better than others during economic downturns. These mostly include what are called "defensive stocks" that tend to pay dividends.

Defensive stocks include several broad classes, including:

• Stocks of companies that make products or provide services that people need no matter the economic climate.
• Gold and silver mining stocks. Precious metals are considered hedges on inflation and the relative value of the U.S. dollar, which generally weakens during recessions.

Examples of the first group listed above include:

• Consumer staples: Food and beverage makers, personal and home care products manufacturers.
• Utilities: Water, electric, and gas utilities.
• Healthcare: Pharmaceutical makers, medical-device makers.
• Discount retailers: In tough economic times, many consumers tend to be more price-conscious.

There are other types of stocks that tend to weather recessions well. You can think of one group as "small indulgence stocks."

During economic downturns, many people will feel uncertain about their job security. As a result, they'll put off large expenditures, such as homes and new vehicles, and cut back their spending on discretionary items, such as clothing.

However, many folks will keep spending on what they consider relatively inexpensive "treats." Some might even increase their spending on such products or services to reward themselves for putting off spending on big-ticket items.

Examples of "small indulgence" products and services include relatively inexpensive:

• Entertainment, such as video-streaming
• Comfort foods (such as chocolates), meals out (fast-food restaurants)

What stocks gained or held up relatively well during the Great Recession?

All recessions are somewhat different, so it's not possible to say that just because select stocks held up well during prior recessions, they'll hold up well in future ones. That said, in general, certain types of stocks tend to perform better than others during tough economic climates, as discussed above, so investors can learn valuable lessons by looking at past recessions.

The Great Recession was a deep economic downturn that officially lasted for 18 months from Dec. 2007 through the end of May 2009. It's widely considered the most severe U.S. economic downturn since the Great Depression, which began following the stock market crash in 1929 and didn't end until the start of World War II in 1940.

During the one-and-a-half years of the Great Recession, the S&P 500 index, including dividends, plunged 35.6%.

Table 1: Stocks that gained during the Great Recession

These stocks and one exchange-traded fund (ETF) are listed in order of descending performance during the Great Recession. This list isn't all-inclusive.

Company	Market Cap	Dividend Yield	Wall Street's Projected 5-Year Annualized EPS Growth	Return During Great Recession	Return From Start of Great Recession to Present*
Netflix (NASDAQ: NFLX)	$469 billion	--	23.6%	70.7%	33,280%
iShares Gold Trust ETF	$41.9 billion net assets	--	--	24.3%	302%
J&J Snack Foods	$2.5 billion	2.4%	9.1%	18.1%	404%
Walmart	$762 billion	1%	9.5%	7.3%	761%
McDonald's	$226 billion	2.2%	7.6%	4.7%	778%
S&P 500 index	--	1.36%	--	(35.6%)	424%

Data sources: Yahoo! Finance, finviz.com and YCharts. Data to Friday, April 25, 2025. EPS = earnings per share. *Bold-faced returns = stock has beaten the S&P 500.

• Netflix: Video-streaming pioneer that's the world's leading video-streaming company.
• iShares Gold Trust ETF: Exchange-traded fund that aims to track the price of gold.
• J&J Snack Foods: Produces niche snack foods and frozen beverages.
• Walmart: World's largest retailer by revenue, focuses on low prices.
• McDonald's: World's largest fast-food restaurant chain by revenue.

Table 2: Stocks that held up relatively well during the Great Recession

The following stocks declined during the Great Recession but held up much better than the broader market, which dropped nearly 36%. This list isn't all-inclusive.

Company	Market Cap	Dividend Yield	Wall Street's Projected 5-Year Annualized EPS Growth	Return During Great Recession	Return From Start of Great Recession to Present*
Newmont	$60.8 billion	1.8%	7.2%	(0.3%)	54.5%
Hershey (NYSE: HSY)	$33.1 billion	3.4%	(7.4%)	(7.2%)	524%
Church & Dwight (NYSE: CHD)	$24.4 billion	1.2%	7.4%	(9.6%)	792%
American Water Works (NYSE: AWK)	$28.1 billion	2.1%	6.5%	(12.7%)*	953%
NextEra Energy (NYSE: NEE)	$136 billion	3.4%	8.2%	(15.7%)	531%
S&P 500 index	--	1.36%	--	(35.6%)	424%

Data sources: Yahoo! Finance, finviz.com, and YCharts. Data to Friday, April 25, 2025. EPS = earnings per share. *Bold-faced returns = stock has beaten the S&P 500. **Company went public in April 2008, a few months after the recession started.

• Newmont: World's largest gold mining company, which also mines other metals.
• Hershey: Largest chocolate company in the U.S. by market share, also sells salty snack foods.
• Church & Dwight: Home and personal-care product maker, best known for its iconic Arm and Hammer brand baking soda.
• American Water Works: The largest and most geographically diverse regulated U.S. water and wastewater utility.
• NextEra Energy: Largest electric utility in the U.S. by market cap and the world's largest generator of renewable energy from wind and sun.

Key takeaways from the above 2 tables

1. Gold mining stocks (Newmont, Table 2) and gold ETFs (iShares Gold Trust ETF, Table 1) might hold up well or even make strong gains during tough economic climates, but they rarely perform well during booming economic times. Therefore, they tend to underperform the market over the long term. These investments are highly volatile and cyclical and best left to short-term traders.

2. Netflix and Hershey are good examples of "small indulgence stocks," as described above. Moreover, Netflix has an added benefit that wasn't an issue during the Great Recession: It should be little affected by the raging tariff war, as U.S tariffs on imports and other countries' retaliatory tariffs are on goods, not services. This is an important distinction that investors should keep in mind when selecting stocks.

3. Top utility stocks can outperform the market over the long term, despite conventional wisdom to the contrary. (Cases in point: American Water Works and NextEra Energy, Table 2.) These stocks aren't just "widow and orphan stocks," as stockbrokers, in general, have long characterized them. A statistic that might surprise many investors: As of April 25, shares of Google parent Alphabet have performed only slightly better than shares of American Water since the latter's initial public offering (IPO) 17 years ago in April 2008: GOOGL has returned 1,090% to AWK's 953%.

4. There are some top-performing stocks that get very little coverage in the financial press. (Case in point: Church & Dwight, Table 2). One takeaway here is that investors shouldn't conflate the amount of coverage a stock gets in the financial press with its desirability as an investment, especially a long-term investment.

Review your stock holdings -- but stay in the market

As noted in this article's opening, top Wall Street banks and economists generally give odds ranging from 40% to 60% that the U.S. will have a recession in 2025 or within the next year. These are quite high odds, so it makes sense that investors review their stock portfolio and perhaps tweak it to make it more recession-resistant.

That said, if you're a long-term investor, it's not a good idea to get out of the stock market entirely or make huge changes, such as selling all of your growth stocks. It's extremely difficult to time the market. If you sell your growth stocks that don't tend to do well during recessions (such as tech stocks), you'll risk missing the early stages of their upturns during the next bull market -- and the early stages of a sustained upturn tend to be strong.

Time is a long-term investor's friend. Over the long term, the direction of the U.S. stock market has been decisively up. The longer your investing time frame, the less concerned you need to be about recessions causing market downturns.

Should you invest $1,000 in Netflix right now?

Before you buy stock in Netflix, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, Hershey, JPMorgan Chase, Netflix, NextEra Energy, and Walmart. The Motley Fool has a disclosure policy.

Recessions can be really challenging periods. A contracting economy causes companies and consumers to pull back on spending. One of the first cuts many economically cyclical companies make is to their dividends.

However, other companies are more recession-resistant. One sector known for its recession resistance is utilities. That's evident by the dividend histories of top utilities like Consolidated Edison (NYSE: ED), NextEra Energy (NYSE: NEE), and Southern Company (NYSE: SO), which have all increased their payouts for more than 20 years in a row, periods which included some severe recessions. Because of that, they're great stocks to buy if you're concerned that a recession is nigh.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Dividend royalty

Through its various local utilities, Consolidated Edison provides electricity and natural gas services to the New York City region and surrounding areas. The company generates very stable earnings backed by government-regulated rate structures. Meanwhile, the region's electricity and gas demand has grown steadily, even during recessions.

That has enabled Consolidated Edison to increase its dividend very consistently. This year was the 51st consecutive year that it hiked its payout. That kept it in the elite group of Dividend Kings, companies with 50 or more years of annual dividend increases. It also extended its record for the longest consecutive yearly streak of dividend increases of utilities in the S&P 500.

Consolidated Edison is in a strong position to continue growing its dividend. It has a conservative dividend payout ratio for a utility (55% to 65% of its adjusted earnings) and a strong balance sheet. That gives it the financial flexibility to continue investing in expanding its utility infrastructure to support the growing demand for electricity and natural gas in the New York City area.

The powerful dividend growth should continue

NextEra Energy operates the country's largest electric utility (Florida Power & Light), which generates stable rate-regulated earnings. On top of that, the company has a leading competitive energy platform (NextEra Energy Resources), which owns an extensive portfolio of renewable energy assets that generate stable cash flow backed by long-term, fixed-rate contracts. Those stable and growing cash flow sources have enabled NextEra Energy to increase its dividend every year over the past three decades.

The company has grown its payout at a roughly 10% annual pace over the past 20 years, which should continue. NextEra Energy is targeting to deliver around 10% annual dividend growth through at least next year. It can deliver that robust dividend growth rate thanks to its lower dividend payout ratio and the earnings growth it has ahead. The company expects to grow its adjusted earnings per share by 6% to 8% annually through 2027.

Powering that growth is the strong and rising demand for power, especially from cleaner sources. NextEra Energy plans to invest a massive $120 billion into energy infrastructure like new renewable energy capacity over the next four years.

Decades of dividend stability and growth

Southern Company operates several electric and natural gas utilities across the South that generate very stable rate-regulated earnings. The company also has a competitive energy business and provides fiber and connectivity solutions. These businesses produce predictable cash flow from long-term, fixed-rate contracts and supply it with potential opportunities for additional growth.

The utility's stable and growing cash flow profile has been on full display over the decades. Southern Company has paid a dividend equal to or greater than the previous year for 77 years. Meanwhile, it has increased its payment for 23 years in a row.

That growth will likely continue. Southern Company plans to invest $63 billion through 2029 to maintain and expand its utility operations to support growing power demand in the South. These investments should power 5% to 7% annual earnings growth, which should support continued dividend increases.

Portfolio stabilizers

Utilities operate very recession-resilient businesses because demand for electricity and gas tends to rise steadily even in a recession. Meanwhile, governments set the rates they charge, which they increase over time to compensate utilities for their heavy investment in maintaining and expanding their infrastructure. Because of that, they produce stable and growing cash flow to support rising dividend payments. That durability makes utilities a great way to diversify your portfolio to help mute some of the impact of future recessions.

Should you invest $1,000 in NextEra Energy right now?

Before you buy stock in NextEra Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NextEra Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Matt DiLallo has positions in NextEra Energy. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.