If a Stock Market Crash Comes in November, You’ll Still Rest Easy Knowing You Bought This Dividend Stock

You don’t have to be someone who believes in doom and gloom to know that a stock market crash will come. After all, it’s just a matter of time. Of course, while people may predict when it will happen, no one knows for sure.

The stock market has pulled back recently, but remains up 10.7% this year. However, economic uncertainty and challenges remain, including an ongoing war in Iran, high energy prices, and elevated short- and long-term interest rates.

If a stock market crash were to occur in November, you’ll undoubtedly feel happy that you own Mondelez (MDLZ -1.90%). Here’s why you should strongly consider this stock as a defensive play to protect you in the event of economic distress and an overall market pullback.

People always want snacks

Mondelez sells snacks under popular brands like Oreo, Ritz, and Cadbury in more than 150 countries. Although the company traces its roots back about a century, it became an independent company in 2012 when Kraft Foods spun off its grocery business.

While people need basic food items, they also want snacks. That means Mondelez’s products don’t see much of a dip in demand when people’s economic situations worsen. And the company’s global presence helps offset weakness in specific geographic regions.

Many people have been facing personal challenges, including higher costs for basic items like gasoline. Nonetheless, Mondelez continues to see steady sales growth. The company’s third-quarter adjusted sales grew 2.1% year over year. Importantly, the bulk, 1.8 percentage points, came from higher volume/changing mix, rather than merely raising prices.

Collecting dividends

Since the 2012 corporate transaction, Mondelez has raised dividends every year. Investors certainly appreciate collecting reliable dividends, but that’s particularly true during a severe market downturn.

Most recently, the board of directors approved a 4% increase to the quarterly rate. It bumped the October payment from $0.50 per share to $0.52 per share.

Based on the company’s earnings, Mondelez can afford the higher payments. It has a payout ratio, or dividends divided by earnings, of 64%.

Aside from reliable, secure dividends, shareholders will also enjoy a much higher dividend yield than the S&P 500 index. At the new quarterly dividend rate, the stock has a yield of 3.2%. That’s nearly triple the S&P 500 yield of 1.1%.

While no one hopes for a market crash, it’s always good to prepare. Acting now means you can make rational investment decisions before other investors panic.