If a Stock Market Crash Comes in July, You'll Still Rest Easy Knowing You Bought This Dividend Stock
2026-07-21 15:33
•Rick Munarriz •The Motley Fool
•••••• • Axe Capital view
Buying Safety: What South Africans Can Learn from Costco’s Resilience
While Costco isn’t on the JSE, its defensive traits offer a useful lens for South African dividend investors wary of turbulence.
Costco's legendary record—growing revenue in 32 of the past 33 years—and its membership-driven model make it a fortress in downturns. It’s expensive on price-earnings, sure, but the low beta (near zero) means it hardly moves with the market, making it an anchor in volatility. South African investors won’t find Costco itself locally, but this story mirrors what we want from local defensive counters like Shoprite or Woolworths: reliable cash flow, resilient demand, and pricing power. With inflation biting and global tensions stoking volatility, leaning into firms that don’t tank when the market does is smart. Banks like Standard Bank or Nedbank, more cyclical and linked to economic cycles, don’t share this shield. If the rand weakens alongside a global risk-off, this defensive stance stands firmer. Beware though—if markets rally unexpectedly, or inflation cools fast, defensive stocks may lag the upswing. this is just my opinion and not financial advice
Buy solid dividend payers like Shoprite and Woolworths while trimming more cyclical banks. Keep an eye on USD/ZAR for external shocks that could shift the mood.
- Shoprite
- Woolworths
- USD/ZAR
- Unexpected market rally reducing defensive stock appeal
- Rapid inflation decline improving cyclical outlook
7/10
Amid rising market concerns including inflation, geopolitical tensions, and potential rate hikes, Costco is presented as a recession-resistant investment. Despite its high valuation (47x trailing earnings), Costco's low beta, consistent revenue growth over 32 of the last 33 years, and membership-based profit model make it an attractive defensive stock for market downturns.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Rick Munarriz
Categories: Macro, Inflation, Equities, Earnings, Capital Returns, Geopolitics
Tickers: COST
Sentiment: Positive - Costco is recommended as a defensive, recession-resilient investment with strong historical performance (positive net sales growth in 32 of 33 years), low correlation to market movements (one-year beta near zero), and a stable membership-based profit model that provides downside protection during market crashes.
Keywords: market crash, recession-resistant, dividend stock, low beta, defensive investment, inflation concerns, warehouse club, membership model
Insights:
- COST: Positive: Costco is recommended as a defensive, recession-resilient investment with strong historical performance (positive net sales growth in 32 of 33 years), low correlation to market movements (one-year beta near zero), and a stable membership-based profit model that provides downside protection during market crashes.