The US Federal Reserve raises interest rates when the market is growing too fast and inflation becomes a point of concern. This period usually indicates the economy is nearing its peak and by investing judiciously in such times, one can get the advantage of late-stage positive momentum. During such times, market indices are around their all-time highs, you have to be careful and buy stocks that can protect your portfolio and thrive in a rising interest rate scenario. Here are 10 stocks that are primed to do just that.

Image Source: Unsplash

1. Goldman Sachs (GS)

   Goldman Sachs is one of the top investment banks in the country. This stock is highly defensive in nature and is lesser sensitive to changing interest rates of the market. Due to this, it does well even in times of volatility and that is evident from the fact that its business didn’t falter during the pandemic. The stock has gained 93% in the past year and is up by 51% year-to-date. Moreover, it is selling only at 7.34 times its earnings and also possesses a dividend yield of 2%. 

2. Bank of America (BAC)

   Bank of America, the second-largest bank in the country, is quite an interest-rate-sensitive stock and can benefit a lot from the current monitory tightening scenario. The company earns mostly from interests and therefore at these times when the interest rates are higher, it can maximize its spread to earn a higher net margin. The company’s shares have soared nearly 60% in the past year and are up by 40% year-to-date. Additionally, it also offers a steady dividend that currently yields at 2%. 

3. Johnson & Johnson (JNJ)

   Johnson & Johnson is a perfectly safe investment option for these volatile times. The company presently has some solid growth drivers like blood cancer drug Darzalex and autoimmune disease drugs Stelara and Tremfya. Also, its heavy investment in researches and strategic acquisitions promise future growth to the investors. Moreover, one can rightly call it the dividend king as it has been paying dividends for the last 59 consecutive years and currently boasts a handsome dividend of 2.4% while the S&P 500 average is just at 1.32%.  

4. Wal-Mart (WMT)

   Wal-Mart is one of the largest omnichannel retailers that is steadily building a fairly large e-commerce business over the globe. The company is aggressively expanding into high-margin businesses like advertising, data monetization, and the eCommerce marketplace. In the US the company has grown its sales by 103% over the past two years and is expecting to reach $100 billion in worldwide e-commerce sales in the near times. The company’s shares have gained a decent 15% in the past year while the corresponding number for the S&P 500 has been 10%.

5. CVS (CVS)

   CVS is an integrated healthcare platform having a massive retail footprint and is a perfect buy in volatile situations. The company has invested heavily into eCommerce and boats having over 35 million unique digital customers who spend 2.5 times more than its other front-store customers. Over the past year, the stock has risen by 33% and by 21% this year. Additionally, it also provides handsome dividends currently yielding at 2.36%. Moreover, the stock is trading only at 15.45 times which is much below its peers that are trading at an average of 21.91 times. 

6. Apple (AAPL)

   Apple is one of the most renowned providers of electronic gadgets and has always been among the best performers on the market. The company’s shares have grown 16% this year and 18% in the past year despite the pandemic. Also, post-pandemic it has again stunned the market by achieving a 36% and 101% growth in its revenues and earnings respectively. Apple has been investing heavily in 5G technology and still has over a million loyal customers to whom it can sell its 5G enabled smartphones. 

7. Berkshire Hathaway (BRK-A)

   Berkshire Hathaway is one of the largest companies in the world and is amongst the highest-priced stocks in the country. Such a high stock price generally discourages any sort of short-term trading so the company can always preserve its value despite volatility in the market. Additionally, the company has a portfolio of carefully picked cyclical businesses that are capable of outperforming the market under any circumstances thus making it an extremely dependable one. Moreover, the company had a decent 33% and 24% growth last year and this year respectively. 

8. Caterpillar (CAT)

   The Caterpillar stock is highly cyclical in nature and can therefore very well capitalize on the ongoing market booms. Presently it is still in a recovery mode after being affected by the pandemic and US-China trade war and has been down by 6% in the past 6 months. But, given the company’s track record it might bounce back soon so one must buy it before it gets costly again. Moreover, the stock is a dividend aristocrat and has been paying out hefty dividends for the last 25 consecutive years.

9. Nike (NKE)

   Nike is one of the most popular footwear and apparel companies around the world and has never shied away from exhibiting its innovation and resilience under any circumstance. Despite going through a pandemic, the company’s sales net income has more than doubled compared to the past year. All thanks to its digital advantage that can ensure the company attains uninterrupted growth over the years. Additionally, the company also has a track record of offering decent dividend payouts and its dividends have increased by more than 250% since 2011. 

10. Blackstone (BX)

    Blackstone is a private equity firm that has bright long-term prospects as it can continue to perform well with the Federal Reserve's support and strong fiscal spending. The company expects to see considerable promise in the coming times in areas like eCommerce, life sciences, sustainable energy, etc., and is intending to raise $4 billion per month on its real estate products by seeing the strong high demand. The company has gained a massive 117% in the past year and 84% year-to-date and also pays handsome dividends currently yielding at 2.61%.

The above-mentioned stocks are highly valued and are a lot less risky than most other stocks in the market. However, before investing one must remember that as the market turns down their portfolios would also shrink so investors must choose only those stocks that can not only capitalize on the present gains but would also help them preserve those as the market starts falling.