Fiscal Cliff 2013 Won't Damage These Stocks

The U.S. economy is scheduled to "fall off" fiscal cliff 2013 on Jan. 2, when $530 billion in tax increases and spending cuts at the federal level will be actuated unless an agreement to avert it can be reached in Washington.

The Congressional Budget Office predicts fiscal cliff 2013 could send the United States into another recession.

But instead of worrying, investors should take this time to prepare.

Despite the magnitude of the fiscal cliff's consequences, there are stocks that will continue to deliver.

To survive the fiscal cliff, investors need to think big.

These Sectors Will Survive Fiscal Cliff 2013

The three sectors that will allow for gains after the fiscal cliff has been crossed are Big Pharma, Big Agriculture and Big Oil.  

What makes stocks in these sectors so appealing is that each is situated to gain from global demographic trends.

Pair that profit potential with high dividend yield and shareholders will find reliable returns.

We found three stocks that can deliver just that.

ConocoPhillips (NYSE: COP), Caterpillar Inc. (NYSE: CAT) and Teva Pharmaceutical Industries LTD (NYSE ADR: TEVA) are sector leaders with vital global franchises and above average dividend yields.

Teva Pharmaceuticals (NYSE: TEVA) is the world's biggest generic drug company. 

For Teva Pharmaceuticals, with the world population aging in Europe and Japan, more is being spent on pharmaceuticals to maintain a healthy lifestyle and to treat the ailments of the elderly. 

The consumer class around the world is also expanding. The more affluent that a populace becomes, the more its citizens spend on medical care. Generic drugs have a natural appeal due to the lower cost.

Teva Pharmaceuticals pays a dividend of 2.43%, higher than the average dividend for a member of the Standard & Poor's 500 Index that's around 2%.

Operating from Israel, Teva Pharmaceuticals is well-positioned to benefit from the increasing global demand for lower cost pharmaceutical products. This is evident in Teva Pharmaceuticals' earnings-per-share growth of 53.77% for this quarter. 

For Big Ag, companies in this field don't get much larger than Caterpillar Inc. (NYSE: CAT) as it is the biggest manufacturer of heavy machinery in the world. Caterpillar will grow as global food demand increases.

There are two huge trends contributing to this. The first is the expanding global consumer class; the other is the continuing growth in urban areas around the world.

From this, there will be more consumers living in urban areas with more to spend on food items, which will increase the price from fundamental supply and demand matters. Farmers will naturally move to be more productive, which requires machines. For that, tractors, combines and other equipment from Caterpillar will be ordered.

CAT's earnings-per-share growth is up by 78.22% this year. The dividend yield is 2.34%.

In addition to rising food prices, there is every reason to believe that high oil prices are here to stay. 

OPEC is committed to $100 a barrel oil. That is needed in order to finance the domestic spending programs that Middle East oil exporters have instituted to prevent an "Arab Spring" uprising in their domain.

Quantitative easing by central bankers around the world will also keep oil prices high. Investors will flee fiat currencies that are being devalued and buy commodities such as oil.

ConocoPhillips (NYSE: COP) is Big Oil is every meaning of the word - and as a bonus is a Warren Buffett favorite. The 4.54% dividend yield of Conoco Phillips is particularly appealing.  Earnings-per-share growth this year is up by 17.70%. 

If an agreement is reached between now and January 2 between Congress and the Obama administration, crossing the fiscal cliff could still be avoided.  Even if that does take place, investing in Caterpillar, ConocoPhillips and Teva Pharmaceuticals will still be rewarding. 

Related Articles and News: