Buying these 2 stocks is a good way to protect against a stock market crash

The stock market has not been kind to most investors in 2022 with the S&P500 down more than 17% since the start of the year. As inflation and rising interest rate uncertainties appear to linger at least through the end of the year, it might be worth adding stocks to your portfolio that could help protect against new risks.

Here are two stocks that not only rose in 2022, but are well positioned for a stock market crash.

1. Rollins: Exterminating pests in good times and bad

Most landlords and tenants know rollin (ROL 0.63%), one of the leading providers of pest control services, because at one time or another, pests are likely to enter a residence. Here are some statistics that might give you goosebumps: Each year in the United States, termites infest approximately 600,000 homes, 14 million housing units report seeing cockroaches, and nearly 15 million people find rodents. .

Because of these unwanted visitors, the pest industry is now worth $20 billion a year worldwide, and $10 billion in the United States. And Rollins estimates that those numbers will grow 4-5% a year for the foreseeable future. For reference, Rollins generated around $2.5 billion in revenue in 2021, which means he has around 12.5% ​​of the market. Rollins’ biggest competitor Terminix (NYSE: TMX)produced around $2 billion in 2021, a market share of around 10%.

Beyond the persistence of unwanted pests, 80% of Rollins’ revenue comes from recurring contracts, an attractive statistic for investors. If a residential or commercial customer needs an exterminator, Rollins will likely sign them to a one- to three-year contract instead of charging for a one-time visit.

Rollins’ first-half 2022 revenue was $1.305 billion, up 11.2% from the $1.174 billion it reported in the year-ago period. The company is feeling inflationary pressure on its fuel and vehicle repairs, however, and its net profit has fallen nearly 10%, from $191.5 million in the first half of 2021 to $172.7 million in the first half. half of 2022. To combat rising gasoline prices, management has committed to a “significant increase” in the size of its hybrid truck fleet by 2024, both to increase efficiency and reduce carbon emissions.

Unlike most stocks in the market, Rollins is up for the year. Beyond its 8% return in 2022 and its 85% rise over the past five years, the company pays a quarterly dividend of $0.10 per share, which, at the current share price, yields 1.1%. And Rollins has paid a quarterly dividend consistently since 1987, regardless of every market crash since then.

2. WWE: Fake wrestling, real money

Believe it or not, World wrestling entertainment (WWE 0.64%) the stock is up about 38% in 2022, outperforming the S&P 500 by more than 50%.

The world’s largest professional wrestling company has faced turmoil this year as its longtime CEO Vince McMahon stepped down over alleged misconduct. WWE uncovered $19.6 million in unrecorded payments linked to Mr. McMahon. McMahon still owns a substantial majority of WWE’s Class B common stock.

Still, the stock has risen about 200% over the past five years, largely due to rising revenue from television licensing deals. Between its tentpole TV properties, NXT, Raw, Smackdownand the WWE Network, the company generated approximately $413 million, or approximately 80% of its total revenue, from licensing deals in the first half of 2022.

While many public companies may worry about their sources of revenue during economic downturns, WWE is not one of them. He has television licensing deals with media giants Comcast, waltz disneyand Fox. Additionally, television licensing deals have a history of increasing in value over time as network owners compete for the right to broadcast advertiser-friendly live events.

Most of WWE’s lucrative television licensing deals will expire in 2024, meaning there probably won’t be a significant rise in its stock price until mid-2023. This is when the company is likely to announce its next offerings. However, WWE’s current deals have annual contractual rights fee increases built in, creating a growing revenue base every year.

Investors may not view WWE as a dividend stock, but the company has paid a quarterly dividend of $0.12 per share since 2011, which at recent stock prices gives it a yield of around 0. .7%.

Between the steady flow of income and the consistency of returning capital to shareholders, WWE is an attractive stock for investors looking to protect or even grow their portfolios in the event of a stock market crash.

The bottom line

After several years of a booming stock market, investors are now facing a recession. None of these stocks are likely to “shoot at the moon” like some tech stocks might. However, their embedded contracts as market leaders in their industries create relatively safe floors that should reward shareholders along the way. That’s why Rollins and WWE deserve consideration when investors see red in their portfolios.

Collin Brantmeyer has positions in SPDR S&P 500, Walt Disney and World Wrestling Entertainment. The Motley Fool holds positions and recommends Rollins and Walt Disney. The Motley Fool recommends Comcast and World Wrestling Entertainment and recommends the following options: January 2024 Long Calls at $145 on Walt Disney and January 2024 Short Calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.

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