the 07/21/2008

The CAPS Screen: Defend Your Portfolio With These 5 Stocks

 

Standard and Poor's research shows that consumer staples,utilities, health care, and financials outperform the market80%-90% of the time during recessions. As my Foolish colleagues TimHanson and Brian Richards point out , this outperformance is due to their reliability and healthydividend policies.

 

Among large caps, this strategy held up extremely well during thelast recession: Most of the top performers -- a group including Johnson & Johnson (NYSE: JNJ ) and Procter & Gamble (NYSE: PG ) -- were defensive dividend payers.

With that in mind, I used our new CAPS screening tool to discover which defensive stocks our 110,000 member CAPSinvestment community loves most.

These stocks have: Market capitalizations greater than $10 billion Dividend payments Debt-to-equity ratios below 25% Four- or five-star ratings from our CAPS community

Remember, in the first year for which we have data, CAPS' four-starcompanies outperformed the market with an average gain of 19%. Five-star stocks did evenbetter.