Is there a market crash coming?
Almost definitely.
When?
No idea. Pretending that one could happen in the near future is an effective way to test out the relative worth of your portfolio though. How would you react if the value of your shares fell by 20%, 50%, or even more?
Which shares would you be happy to hold through a crash, and which are you going to wish you'd dumped months ago? Here are three shares that any investor should be glad to have in their portfolio during times of market upset:
Telstra Corporation Ltd (ASX: TLS) – yields 5.7% fully franked
Telstra's nationwide network of telecom goodness is just what the doctor ordered for seeing your portfolio through a market crash. 41% of product sales come from Mobile subscribers, 26% from Fixed line services, 14% from Data & IP, and 10% from its NAS division in its most recent report, giving the company a wide range of income sources. In an increasingly online world, internet and mobile services are no longer optional and this gives Telstra plenty of resistance to a downturn.
Factor in huge cash generation, a legendary dividend, and market-beating returns, and let Telstra carry the load for you during a crash.
Sydney Airport Limited (ASX: SYD) – yields 3.9% unfranked
Infrastructure stocks are attractive businesses to own at all times, but especially during a crash as their revenue is highly recurring and somewhat less prone to a deterioration in economic conditions. After all, goods and people still need to move down that road, port, or in this case, airport. Over the long term, increasing demand to use that asset (as well as rising fees to do so) as a result of demographic tailwinds delivers a steadily growing stream of earnings to shareholders. Better yet, a significant chunk of Sydney Airport users are from overseas, reducing the company's reliance on the vagaries of our domestic economy.
As the icing on the cake, Sydney Airport has also managed to significantly outperform the S&P/ASX 200 (INDEXASX: ^AXJO) (ASX: XJO) over the past decade.
Cochlear Limited (ASX: COH) – yields 2% fully franked
Not many people buy Cochlear for its dividend. What they do buy it for is quality management, a world-class portfolio of hearing devices, cutting edge R&D, and market-thumping performance. Cochlear estimates that global penetration of the implantable hearing device market is less than 5%, and this gives the company a long growth runway, while the vast majority of Cochlear's sales are made overseas, limiting its exposure to a potential downturn in any single country.
The healthcare industry is generally more resistant to a downturn than other less essential ones, and many of Cochlear's products are likely seen as a necessity by their users, who suffer reduced quality of life without them. Cochlear has been a long-term out-performer, and one I think deserves a spot in any crash-resistant portfolio.
