Worried about a recession? Buy these 2 top dividend stocks and relax.

Investing doesn’t have to be complicated, but it’s not as simple as finding the next big thing, at least for most people. Long-term investing success requires a strategy that includes diversification, with a mix of different types of stocks that help you grow your portfolio in good circumstances and protect it in worse circumstances. Just owning growth stocks could be a risky allocation, especially when there are bear markets, crashes and recessions.

Because these events are an integral part of market cycles, it’s important to invest in solid dividend stocks. If you’re looking for reliable dividend stocks to anchor your portfolio if a recession is on the way, Visa (V 1.81%) and American Express (AXP 1.01%) there are two great choices.

1. Visa: Everyone has to buy food

There are all kinds of stocks, dividends being one kind, and even within dividend stocks, there are many different types. Some are high yield but have high risk, while others are highly reliable but may have lower yield. Some dividend stocks are also reliable for stock growth, while others, not so much.

Then there are dividend stocks that will pay no matter what, either because they are so committed to their dividends or because their businesses are resilient and less prone to disaster even in extremely difficult conditions.

Visa is a great dividend stock because it’s a great, resilient company. Find all types of payments, with higher payment volume and more card members than any other credit card network. It’s a low-asset company with an unmatched profit margin that was nearly 55% in the second quarter, and with its profits and cash flow, it can easily fund its businesses and reward shareholders.

Visa’s business suffered setbacks at the start of the pandemic. Sales dipped a bit before picking up. But it remained comfortably profitable and cash-rich throughout, even if buyers were more interested in toilet paper than luxury watches. Today it demonstrates robust performance despite inflation.

V Revenue data (quarterly) by YCharts

The only negative aspect of the Visa dividend is that it does not have a high yield. It’s 0.77% today, which is close to 10-year highs. However, Visa has increased its dividend annually for years and is up more than 300% over the past 10 years, which is an excellent track record.

2. American Express: The Rich Market

American Express is also a credit card network, like Visa, but operates under a different model. It has a banking segment and has expanded its business to a wide range of financial services. Unlike Visa, which has relationships with the banks that underwrite its credit cards, American Express has a closed-loop business and funds its own credit cards.

It’s reliable during a recession for two reasons: it targets an affluent customer base that has more money to make purchases in a downturn, and because it’s a bank, it has a lot more cash than Visa.

V Cash and Equivalents (Quarterly) given by YCharts

Warren Buffett owns both stocks, but has often praised American Express as one of his favorite companies. It has a groove in its global brand and targeted credit cards and appeals to affluent shoppers from all demographics. It charges an annual fee for most of its cards, and the fee model drives loyalty and profitability.

One of the reasons Buffett loves American Express is its dividend, which yields 1% at the current price. This is slightly down for American Express, as it is beating the market by a wide margin this year with a total return of 35%.

American Express is an excellent choice for investors looking for a reliable dividend stock to carry them through all kinds of economic events, including a recession.