Worried About a Bear Market? Have This One Type of Stock in Your Portfolio Before a 20% Crash.

As U.S. consumer confidence weakens, some may worry that a bear market could emerge, in which a major index like the S&P 500 would fall 20% or more from its recent highs. According to a report from the nonprofit think tank The Conference Board, U.S. consumer confidence in August fell to its lowest level since January.

That isn't a guarantee that a bear market will form. But as U.S. debt levels sit at $40 trillion, worries about rising living costs increase, and inflation remains stubborn, many are considering how best to prepare for a correction that could eventually turn into a bear market.

While the best course of action for a portfolio varies by investor, there is still one class of stocks that may bend but won't break during a bear market.

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Constant dividend boosts

Dividend Kings are companies that have boosted their payouts for 50 or more consecutive years. And there have been plenty of reasons a company may not have accomplished that feat, from stagflation to stock market crashes to recessions to war to the COVID-19 pandemic.

That ability to keep boosting payout points to strong business models, as Dividend Kings can keep generating enough cash to pass on to shareholders as income, no matter what the market throws at them.

Prepare for a bear market with this stock

Walmart (NASDAQ: WMT) is one company in the Dividend King Club. The retail giant has boosted its dividend payout for 53 consecutive years and knows how to navigate through challenging times, such as during the 2008 financial crisis. As other companies' stock prices were being decimated, Walmart's stock price climbed 21.6% in 2008. It's currently facing challenges from higher fuel costs, which may continue to affect near-term results. But Walmart is still well-positioned to handle those challenges, as well as a broader bear market, if one were to occur.

By selling necessities and making shopping easier than ever, Walmart will continue to generate consistent revenue, no matter what's happening in the broader markets. Its Walmart+ subscription service includes free delivery and free shipping with certain restrictions, and Walmart+ hit a record number of net additions for the retailer's 2027 fiscal second quarter.

In addition, Walmart is seeing noticeable progress with its artificial intelligence shopping agent, Sparky. The number of customers using Sparky was up 70% in the second quarter of 2027, and those who use Sparky spend 40% more per order than non-Sparky users.

Walmart's dividend payout is on the smaller side, at 0.9%. But that yield can also be added to Walmart's stock price appreciation potential, boosting total returns. And what's most important is that Walmart has proven it can keep increasing its payout no matter the state of the markets, which is a sign of a strong business model that may bend during tough times but won't break.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.