For those dividend investors among us, it can be hard to know what to do as fears of a recession rise and the media machine tells a doom-and-gloom story.
If you're not sure how to protect your ASX portfolio from the downside in the next 12–18 months, here are a few ideas to get you started in 2020.
1. AGL Energy Limited (ASX: AGL)
The Energy sector has historically proven to be a defensive sector on the ASX as many of the Aussie energy company share prices have held their gains compared to the rest of the market.
In terms of ASX dividend stocks, one of my favourites at the moment is AGL Energy, which is trading at $18.96 per share and yielding 6.3% per annum.
The AGL share price has fallen 6.6% so far this year but these minor losses could mean it is undervalued and a good buying opportunity if you think there's a market crash heading our way in 2020.
2. Woolworths Ltd (ASX: WOW)
Even in a recession, people still need to buy their groceries and this makes the Woolworths share price an attractive buy at $36.24 per share.
The Woolworths share price is up 24% so far this year and I think it does look better value than rival Coles Group Ltd (ASX: COL), given the maturity of its operations and solid earnings result in August.
Woolworths posted a net profit of $1,752 million and is currently yielding 2.8% per annum, making it an attractive option to protect your ASX portfolio from the downside while also picking up some income along the way.
3. CSL Limited (ASX: CSL)
CSL is one of the largest companies on the ASX at its current $106 billion market cap, as the CSL share price has climbed 26% higher to $234.68 per share.
While certainly one of the more expensive stocks on the ASX 200, CSL is uniquely placed to capitalise on the growing blood plasma industry within the Healthcare sector.
CSL enjoys a healthy competitive advantage with strong barriers to entry, meaning it should continue to grow for the next decade or so as it monetises this advantage and further develops its research and development capabilities.
Healthcare has been another defensive sector in past cycles and I see no reason to expect that to change anytime soon, meaning CSL could provide a solid 1% dividend and hold its gains if a recession hits in 2020.
