Although the markets have been suspicious of the point we are currently at in the economic cycle for quite some time, US President Donald Trump has dramatically reignited fear in stock exchanges around the world. The imposition of additional tariffs on Chinese imports into the US has shocked markets and spooked many investors, particularly those exposed to exporting industries or China in general. Suddenly the next recession seems a little closer, and we as investors should start thinking about our portfolios if things head south.
Here are three ASX stocks that would be well-positioned to weather any deteriorating economic conditions.
APN Industria REIT (ASX: ADI)
APN Industria REIT is focused on commercial real estate. With a portfolio of 24 industrial and business parks across Sydney, Melbourne, Brisbane and Adelaide, APN Industria is a relatively cheap way of gaining exposure to the commercial property sector. The ownership of land (with low leverage) is a great way to sustain wealth even in troubled times. Adding to this security, Industria's average lease is almost 7 years, with 3% annual rental increases written in, which gives it a fantastic inflation/deflation-hedge as well as a highly predictable stream of earnings.
Although REITs don't come with franking credits, they do not have to pay company tax and by law must pass on 90% of their earnings to shareholders as distributions. For these reasons, APN Industria pays a healthy yield of 5.54%, which would assist in buoying your portfolio in a sea of red.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Sydney Airport Holdings operates Sydney's Kingsford-Smith Airport, the largest commercial and passenger airport in Australia. Infrastructure-based holdings like Sydney Airport are highly conservative assets as demand for their services is very consistent and stable. Although Sydney Airport shares are somewhat overpriced at the present time (in my opinion), infrastructure assets are an important defensive component of any dividend-focused portfolio and investors will likely flock to SYD shares if things go pear-shaped. With a yield of 4.96% on current prices, Sydney Airport is still a great candidate for a recession-proof portfolio.
Northern Star Resources Ltd (ASX: NST)
Gold is one of the few assets that consistently outperform other investments during tough times. Global trade uncertainty and the possibility of recession is a perfect cocktail for gold prices and gold-miners like Northern Star are the first to profit from this. This explains why the Northern Star share price is already up over 7% in the last few days and is likely to continue to rise if these global tensions continue. Although Northern Star's dividend yield is relatively small at 1.1%, the hedge-like nature of a gold-miner is an asset in itself if you're worried about choppy waters ahead.
For more stock ideas that might be a bargain at current prices, check out these 5 ASX companies.
