Recession Fears: Strategies for Safe Haven Investments

Defensive Sectors and Dividend-Paying Stocks

Consumer staples and utilities sectors, represented by companies like Procter & Gamble, Duke Energy, Johnson & Johnson, and Coca-Cola, are highlighted for their significant dividend payments and stock repurchases, making them attractive safe haven investments during economic downturns.

"We expect adjusted free cash flow productivity of 90%, and we expect to pay more than $9 billion in dividends to repurchase $5 billion to $6 billion in common stock, combined a plan to return $14 billion to $15 billion of cash to share owners for the year." --- (PG, earning call, 2024/Q3)

"We are well positioned to achieve our growth targets, which, combined with our attractive dividend yield, provide a compelling risk-adjusted return for shareholders. With that, we'll open the line for your questions." --- (DUK, earning call, 2024/Q2)

"Cash flow from financing activities of $8.1 billion was primarily from: (Dollars In Billions) $ (5.9) dividends to shareholders (1.6) repurchase of common stock 15.9 net proceeds from short and long term debt 0.3 proceeds from stock options exercised/employee withholding tax on stock awards, net 0.3 credit support agreements activity, net (1.0) Settlement of convertible debt acquired from Shockwave 0.1 Other and rounding $ 8.1 Net cash from financing activities The Company has access to substantial sources of funds at numerous banks worldwide and has the ability to issue up to $20 billion in Commercial Paper." --- (JNJ, sec filing, 2024/Q2)

"This dividend is payable on October 1, 2024 to shareowners of record as of the close of business on September 13, 2024." --- (KO, sec filing, 2024/Q2)

"several categories. We expect to pay around $10 billion in dividends and to repurchase $6 billion to $7 billion of common stock, combined a plan to return $16 billion to $17 billion of cash to share owners this fiscal year." --- (PG, earning call, 2024/Q4)

The Role of Cash and Liquidity

Cash and liquidity are crucial for safe haven investments, with major financial institutions emphasizing robust liquidity management tools, holding highly liquid securities, and maintaining strong capital positions to meet cash flow needs and weather economic shocks.

"from when they actually receive an order to then realizing the cash. Then as you heard from Steven, they leverage our best in class liquidity management tools to get visibility to and then manage this cash.And finally, our global payout capabilities finish the cycle from invoicing to payment across both domestic and cross border payouts with embedded effects." --- (C, event transcript, 2024/06/18)

"A primary liquidity principle is to pre-fund our estimated potential cash and collateral needs during a liquidity crisis and hold this liquidity in the form of unencumbered, highly liquid securities and cash." --- (GS, sec filing, 2024/Q1)

"Liquidity Risk Funding and Liquidity Risk Management Our primary liquidity risk management objective is to meet expected or unexpected cash flow and collateral requirements, including payments under long-term debt agreements, commitments to extend credit and customer deposit withdrawals, while continuing to support our businesses and customers under a range of economic conditions." --- (BAC, sec filing, 2024/Q2)

"A Closer Look at the Data: The report finds that most households have sufficient liquidity to weather moderate expense shocks, and that sources of liquidity beyond cash savings are the key to many households' ability to weather an emergency expense." --- (JPM, press release, 2024/07/30)

"We have strong capital and liquidity positions. As we're building many of our businesses, we have done so within a consistent level of risk appetite, and our business model and franchise value differentiates us from most of who we compete with regardless of the environment." --- (WFC, earning call, 2024/Q1)

Risks and Considerations for Each Strategy

Investing in U.S. government securities is a common safe haven strategy, but risks include potential impairment charges if securities are sold before recovery (MSFT). Balancing growth and margins during technological innovation (GOOG) and the cyclical nature of commodity markets (AAPL) are also key considerations.

"We continue adapting our strategy to meet our liquidity and risk objectives, such as investing in U.S. government securities and other investments, to do more vertical integration, expand our product roadmap and provide financing options to our customers." --- (TSLA, sec filing, 2024/Q1)

"If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established." --- (MSFT, sec filing, 2024/Q4)

"I wanted to know if you could talk a little bit about both the opportunities and the challenges of operating at scale in a time like this where there's a lot of technology innovation going on and how you see the elements of trying to strike a balance towards moving the organization forward while still continuing to both invest for growth as well as balance margins. Thanks so much." --- (GOOG, earning call, 2024/Q1)

"The other factor that obviously has an impact, a significant impact is the state of the commodity markets, and they tend to go in cycles." --- (AAPL, earning call, 2024/Q3)

"We continue adapting our strategy to meet our liquidity and risk objectives, such as investing in U.S. government securities and other investments, invest in autonomy, do more vertical integration, expand our product roadmap and provide financing options to our customers." --- (TSLA, sec filing, 2024/Q2)