The U.S. Labor Market Is Weakening. These 2 Dividend Stocks Look Built to Weather a Recession
The U.S. Labor Market Is Weakening. These 2 Dividend Stocks Look Built to Weather a Recession
Prosper Junior Bakiny, The Motley FoolTue, August 11, 2026 at 9:50 PM UTC
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Key Points -
The most recent Jobs Report heightened recession fears.
Investing in dividend stocks is a great way to navigate recessions.
The two stocks below have raised their payout for a combined 118 straight years.
10 stocks we like better than Johnson & Johnson ›
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The U.S. Bureau of Labor Statistics recently released the July 2026 Jobs Report. It was much weaker than anticipated, with hiring weakening considerably, as employers cut 23,000 jobs during the month. For some people, this development renewed fears that a recession is coming. We can't know for sure that it is. However, given a weak jobs report, lingering geopolitical tensions, and relatively high inflation, it certainly isn't outside the realm of possibility. It's always a good idea for investors to be prepared for a recession, and investing in robust, dividend-paying companies can help them do that. Here are two to consider: Johnson & Johnson(NYSE: JNJ) and Abbott Laboratories(NYSE: ABT).
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1. Johnson & Johnson
Johnson & Johnson has had a great year. Its financial results have been strong despite some headwinds, including biosimilar competition for some products and the impact of government-led drug price negotiations. The healthcare giant's ability to navigate these problems speaks volumes about the strength of its underlying business. And if a recession hits, Johnson & Johnson should be just fine.
The company's lifesaving drugs, which it markets across many therapeutic areas, will remain in high demand, especially since insurance companies foot most of the bill anyway. It's also worth noting that the future looks increasingly bright for the healthcare leader. Here are three reasons why. First, Johnson & Johnson continues to innovate within its core pharmaceutical segment.
It recently earned approval for Icotyde, the first oral peptide of its kind for plaque psoriasis. It is also developing Milvexian, an investigational anticoagulant that could significantly reduce the bleeding risk associated with today's competing medicines.
Second, Johnson & Johnson's medtech business is improving as well. It recently earned clearance for the Ottava robotic-assisted surgery system, which should become a meaningful growth driver down the line. Third, Johnson & Johnson moved one giant step closer to eliminating the thousands of lawsuits it has been dealing with regarding its talc-based products that allegedly gave patients cancer.
These are all great reasons to be optimistic about the future. Then there is the company's dividend program. Johnson & Johnson is a Dividend King, or a corporation with at least 50 consecutive years of annual payout raises. The company's current streak is 64 years. Now, Johnson & Johnson likely won't emerge from a recession entirely unscathed. Hardly any corporation does. But the company seems better equipped than most to deal with one. That's why it is a great pick for investors preparing their portfolios for a potential economic downturn.
2. Abbott Laboratories
Has Abbott Laboratories finally bottomed out? After about 18 months of poor performance, the stock has outpaced the broader market over the past three months. It may be too early to celebrate, as Abbott Laboratories hasn't completely put its headwinds behind it. The company's nutrition and diagnostic businesses -- the source of much of its recent issues -- still aren't performing that well. However, Abbott Laboratories' core medical device segment remains strong.
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In the second quarter, the company's revenue came in at $12.6 billion, up about 5% on a comparable sales basis (which excludes the impact of foreign exchange rate fluctuations and other factors). Abbott's medical device business posted sales of $5.9 billion, up 8.4% year over year. Abbott's diabetes care segment, led by the FreeStyle Libre -- a line of continuous glucose monitoring (CGM) devices -- remains one of its key products. There are other growth drivers in the company's arsenal, especially within its structural heart and heart failure segments.
These are parts of the business that can perform fairly well even during a recession. For diabetes patients who rely on CGM devices to keep track of their sugar levels and avoid potentially serious complications of their chronic disease, a recession doesn't change their needs. Similarly, Abbott's MitralClip is a leading non-invasive option to help repair a leaky heart valve, which can become a serious and potentially life-threatening condition when left untreated.
Patients won't want to forgo undergoing procedures like those either, even when the purse strings tighten. Further, Abbott Laboratories plans to improve its weaker segment, particularly diagnostics. The company could tap into the large and growing cancer diagnostics market thanks to a recent acquisition. Lastly, Abbott Laboratories is also a Dividend King and currently boasts 54 consecutive years of payout increases. All good reasons to stick with the company through a recession and hold onto its shares for the long term.
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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Source: “AOL Money”
