11 Stocks Hold Up Best During Corrections (And 2 Even Gain)

Simply not losing much money is a victory during a correction. And some S&P 500 stocks tend to be especially good hiding places.

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Now that investors are on the defensive amid a correction that’s dragging on, they may want to know which S&P 500 stocks hold up best during sell-offs. They’re mostly utilities like Southern Co. (SO) and Dominion Energy (D) plus some consumer staples like Church & Dwight (CHD), says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. All these S&P 500 stocks outperformed the S&P 500 in each of the 11 corrections since 1990.

The fact there are corrections and bear markets “shouldn’t keep us from investing, they are merely meant to set expectations as we head forward in a challenging environment,” said Ross Mayfield, strategy analyst at Baird Private Wealth Management. “Volatility and sell-offs are just a reality to bear for the long-term stock owner.”

How This S&P 500 Correction Compares

There’s good reason for investors to get antsy over the S&P 500’s tumble. This correction is starting to drag on.

The S&P 500 has been in a correction for more than 137 trading days, says Ryan Detrick, strategist at LPL Financial. That’s already slightly longer than the 133-day average duration of corrections going back to World War II.

And at its worst, the S&P 500 dropped 18.7% in this correction, just shy of a 20% bear market. That, too, is slightly worse than usual. The typical correction knocked the S&P 500 down 14.3%, Detrick says. The S&P 500 is still down nearly 14% this year, despite an attempt to rally.

“Who knows if that’s the lows,” Detrick said. “But be aware it is in the range.” But what kinds of stocks tend to hold it together?

Utilities: Pay You To Hide Out

It’s no surprise high-dividend stocks are blowing away growth stocks. Investors want to get paid to wait out the storm.

Take Southern, an Atlanta-based power utility firm. Shares of the company actually rose 2.9%, on average, during the last 11 corrections starting with the one that started in 1990. That sure beats the S&P 500’s average 15.4% drop during that time.

And just look at what happened in the correction from May 21, 2015 through Feb. 11, 2016. During that time, the S&P 500 plunged a crushing 14.2%. But Southern? Its shares rose 10.8% during that time. And on top of all that, the stock yields 3.5%. The stock is already up 10.3% this year as investors see a good thing in a bad market.

Similarly, shares of Richmond, Va.-based utility Dominion gained an average of nearly 1% in the recessions since 1990. Amazingly, it rose 1.1% in the last correction prior to the current one that spanned from Sept. 20, 2018 to Dec. 24, 2018. During that period, the S&P 500 collapsed nearly 20%. Shares this year are up nearly 6% and the stock yields 3%.

S&P 500 Staples For Corrections

During the 2021 rally in the S&P 500, some investors thought stocks never went down. They found out this year how wrong that misconception is.

But there is one S&P 500 stock that fits that bill: Arm & Hammer maker Church & Dwight. It’s the only stock in the S&P 500 that’s risen every year since 2008. But more importantly, now, it’s also one of the few stocks outside of the utilities sector that’s topped the S&P 500 in every correction since 1990.

That’s not to say it doesn’t fall during corrections, too. Just not as much as most. It’s only fallen 3.2% on average during corrections since 1990. Again, that’s better than the typical 15.4% drop by the S&P 500 in that timeframe. So far this year, though, things aren’t going as well. The stock is down 13.2%, but again, that’s still marginally better than the S&P 500’s 13.6% drop.

Are these the kinds of stocks you’ll want to own when the correction ends? Probably not. But you can at least appreciate why investors like them now.

Correction Beaters

They all topped the S&P 500 during all 11 corrections since 1990

Company Symbol Sector Average stock % ch. in corrections since 1990 Yield Southern Co. (SO) Utilities 2.9% 3.48% Dominion Energy (D) Utilities 0.7 3.02 Xcel Energy (XEL) Utilities -0.5 2.58 Public Service Enterprise Group (PEG) Utilities -1.0 3.15 Atmos Energy (ATO) Utilities -1.5 2.33 Entergy (ETR) Utilities -3.1 3.36 Alliant Energy (LNT) Utilities -3.2 2.74 Church & Dwight (CHD) Consumer Staples -4.4 1.18 McCormick & Company (MKC) Consumer Staples -4.6 1.62 Rollins (ROL) Industrials -4.8 1.38 Brown-Forman (BFB) Consumer Staples -5.1 1.14 S&P 500 -15.4% Sources: IBD, S&P Global Market Intelligence Follow Matt Krantz on Twitter @mattkrantz

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