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3 ASX shares for a recession proof portfolio

Tristan Harrison
defensive, sword, fencing, fight

Australia might be getting closer to recession, so it might be an idea to look for ASX shares that could be fairly recession-proof.

There is no share that can guarantee no share price falls, but some businesses could have dependable earnings:

Here are three shares that I think that could be good picks in case of a recession:

APA Group (ASX: APA) 

APA is one of the biggest infrastructure shares on the ASX. It owns a large network of gas pipelines across Australia. It also owns or has a stake in: energy storage & processing, power stations and renewable energy. It also provides asset management services to third parties.

Higher demand for energy and additional energy investments continues to grow APA’s earnings.

APA has seen its distribution grow every single year over the past decade and a half, including through the GFC.

It has a trailing distribution yield of 4.3%.

InvoCare Limited (ASX: IVC) 

InvoCare is the largest funeral provider in Australia and New Zealand. There are only two things certain in life, death and taxes. InvoCare can almost expect a certain amount of activity each year. Demand certainly isn’t determined by Australia GDP movements.

The company has a number of different brands to appeal to different price points, but it also has White Lady Funerals for families wishing to spend more on a funeral.

Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This is a long-term growth tailwind for InvoCare. 

It has a grossed-up dividend yield of 4%.

Ramsay Health Care Limited (ASX: RHC) 

Ramsay is one of the world’s largest private hospital operators with its hospital networks in Australia and Europe.

We don’t decide to get sick or injured based on how the Australian economy is going. Ramsay is also exposed to long-term growth tailwinds because of the ageing population in Australia and Europe.

The company is steadily investing in expanding existing hospitals or building new ones. The acquisition of Capio diversified Ramsay’s earnings further.

It currently has a grossed-up dividend yield of 2.75%.

Foolish takeaway

All three of these shares could be good bets to defend against a recession. I think InvoCare in-particular could be a good defensive share because of its uncorrelated earnings compared to the general economy. 

The post 3 ASX shares for a recession proof portfolio appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare Limited and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020