Although we cannot precisely predict whether an economic recession is imminent, certain policies and events undoubtedly heighten this risk. The tariff policies implemented by former President Trump could drive up overall price levels, thereby suppressing economic growth and dragging the economy into a downturn. Furthermore, if the recent government shutdown persists, it could also become a direct trigger for an economic recession. While these scenarios may not ultimately materialize, prudent investors should consider allocating funds to stocks that typically demonstrate strong resilience during economic downturns, in order to prepare for potential risks. Among the many options, Walmart and Johnson & Johnson are two noteworthy examples.
As a leading enterprise in the U.S. retail industry, Walmart indeed needs to pass on some of the increased costs from tariff pressures to consumers, which might affect consumer willingness to spend. However, looking back at its development history, Walmart has maintained stable revenue and profit growth over decades of operation, including during past economic downturns, demonstrating robust cross-cycle operational capabilities. Its core advantage lies in its extensive physical retail network across the United States—approximately 90% of the U.S. population lives within 10 miles of a Walmart store, providing unparalleled shopping convenience for the vast majority of consumers.
During periods of economic tightening, when consumers are more price-sensitive, Walmart’s economies of scale translate into significant competitive advantages. Its strong bargaining power in procurement enables it to consistently attract customers with low prices; even in an inflationary environment, its price advantage remains evident. Simultaneously, the e-commerce business that Walmart has vigorously developed has made it the second-largest e-commerce platform in the U.S. after Amazon. The convenient omnichannel shopping experience and cost control capabilities collectively solidify its position as the top choice for frugal consumers. Additionally, Walmart has increased its dividend payments for 53 consecutive years, earning it the title of “Dividend King.” The stable dividend returns and reinvestment mechanism can effectively cushion against losses from stock price declines during market volatility, further enhancing its appeal as a defensive stock against economic recessions.
As a giant in the healthcare sector, Johnson & Johnson’s products and services, particularly pharmaceuticals, typically see demand that remains unaffected by economic cycle fluctuations, providing a natural protective barrier for its performance. The company boasts a diverse drug portfolio covering key therapeutic areas such as oncology and immunology. Although the patent for its blockbuster product Stelara has expired in the U.S. market, the company’s overall financial performance remains robust: revenue for the most recent quarter increased 5.8% year-over-year to $23.7 billion, demonstrating strong operational resilience.
Johnson & Johnson’s ability to successfully navigate patent cliffs proves its strength in maintaining growth amidst challenges. The diversified operations of its medical technology business, along with the Ottava robot-assisted surgical system under development, position the company to capture future growth opportunities. The RAS market in which this system operates still has low penetration rates, indicating significant potential. Furthermore, the direct impact of tariffs on Johnson & Johnson is relatively limited now. Although the company still faces some legal challenges, its solid balance sheet provides sufficient buffer to handle these headwinds. Like Walmart, Johnson & Johnson is also a seasoned “Dividend King,” having increased its dividends for 62 consecutive years. This long-term and stable dividend record makes it a reliable choice for investors seeking capital preservation and appreciation amid economic uncertainty.
