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With all due respect to the terrible economy of 1973-1974, The Great Recession of 2008-2009 has found its place in history as the second worst economic catastrophe to hit the United States in the past century, trailing only The Great Depression. But when you compare The Great Depression to The Great Recession, you will notice one critical difference between the two: many of the blue-chip stocks during the Great Depression experienced significant declines in business performance, while many investors in high-quality assets during The Great Recession of 2008-2009 saw their businesses continue to fire on all cylinders.

During the Great Depression, just about everything got whacked. IBM (IBM) saw its earnings fall 40%. Pillsbury saw its earnings fall over 30%. General Motors, despite steady international expansion, saw its earnings fall 28%. The Union Pacific (UNP) railroad saw its earnings get cut in half. AT&T (T) experienced an earnings decline of over 20%. For the few American investors fortunate enough to even have money to invest during The Great Depression, they had to make the very difficult judgment call to determine whether the earnings declines of these companies were temporary or permanent. To put it mildly, that makes investing hard.

This is what made The Great Recession of 2008-2009 so strange in comparison. Yes, the stock market declined almost 40%. But look at what happened to investors that owned excellent companies outside the financial or cyclical sectors:

1. Procter & Gamble (PG) saw its earnings decline by about a nickel from 2008 to 2009, as they fell from $3.64 to $3.58. The worst financial crisis many of us have seen in our lifetimes, and P&G is only making six cents less per share. Oh, and the company actually increased its payout to shareholders by giving them a raise from $1.45 to $1.64 in annual payouts.

2. IBM, which got clobbered during The Great Depression, survived much better this time around. From 2008 to 2009, IBM actually grew its earnings from $8.93 to $10.01 and jacked up the dividend from $1.90 to $2.15 per share. The price decline from $130 to $82 was actually a blessing because IBM stuck with its buyback program, making shareholders richer in the process. From the IBM shareholder's perspective, the 2008-2009 was actually a blessing that made them richer in a way they could realize at that very moment: the earnings per share went up over a dollar!

3. Lorillard (LO), the storied tobacco giant, also delivered results that could make someone looking at the financial results alone think, "What recession?" Like IBM, Lorillard was in the process of conducting a large buyback program, and took advantage of the low prices to reduce the share count by roughly 30-40 million shares. This allowed investors to see an immediate earnings per share increase from $1.72 in 2008 to $1.92 in 2009. Oh, and Lorillard granted its investor the largest dividend increase in its history in 2009, more than doubling it from $0.61 annually in 2008 to $1.28 in 2009.

4. PepsiCo (PEP), the legendary soda and snack manufacturer that comes about as close to "buy and forget it" as you can find, grew its earnings from $3.21 in 2008 to $3.77 in 2009. Oh, and shareholders got a dividend raise from $1.60 to $1.76 annually. It's crazy: while many were selling their stocks and running for the exits as the prices declined during the March lows, a company like Pepsi was achieving record levels (at the time) of profitability and returning even more of those profits to shareholders in the form of cash dividends.

5. Colgate-Palmolive (CL), which is one of the few blue-chip companies out there that is both safe and projecting to grow at rates greater than 10% for the medium term, saw its earnings grow from $3.66 in 2008 to $4.37 in 2009 (although the company's earnings did decline a bit to $4.31 in 2010, mostly due to currency fluctuations). The company aggressively hiked its dividend from $1.56 in 2008 to $2.03 annually in 2010.

6. If you ever get a chance, check out a chart of Coca-Cola's (KO) earnings from 2003 to 2013. It's a beautiful sight. Other than a negligible earnings decline from 2008 to 2009 (earnings went from $1.51 to $1.47), the company's earnings per share move in a steady march upward. As for Coca-Cola's dividend, there are no exceptions. It is a steady march upward. There's a reason why this company gets touted as the ultimate buy-and-hold stock. The worst crisis in many of our lifetimes didn't even shave a nickel off of this company's earnings per share.

7. Right now, I'm looking at data charts that go back to 1997. During every year in that period, Johnson & Johnson (JNJ) increased its normal earnings per share. No exceptions. There is a reason why this company is my largest personal holding. While everyone complains about the steady stream of recalls that has dogged this company, a look at the company's financials reveal one thing: this company keeps getting more and more profitable. During the worst of the Great Recession, Johnson & Johnson increased its earnings $0.06 per share and the annual dividend went up $0.13 per share.

8. What the heck, let's take a look at what the king of retail did. Wal-Mart (WMT) increased its earnings from $3.42 per share in 2008 to $3.66 in 2009. The dividend went up from $0.93 per share in 2008 to $1.06 in 2009. If you look at an earnings and dividend chart for Wal-Mart since 2000, you won't be able to identify any point at which it looked like Wal-Mart the business was experiencing a recession. The earnings and dividends just keep going up.

9. Oh, and of course, there is McDonald's (MCD). Since hitting a low in 2002, the company's earnings and dividends have been steamrolling upward. During the crisis, McDonald's grew its earnings from $3.67 in 2008 to $3.98 in 2009. The dividend went up from $1.63 in 2008 to $2.05 in 2009. McDonald's is yet another company that, from the perspective of a shareholder, there appeared to be no recession.

This is why some people build a portfolio of blue-chip stocks that exclude most banks, tech, and cyclical companies. This is why they do the whole blue-chip dividend investing thing. While the prices of these companies cratered, the business performance of these companies actually improved or experienced a comically negligible decline, given the scope of the crisis. That is the crazy thing about the stock market collapse. Many of the best blue-chip companies were making record profits and making record dividend payouts while others were obsessing over the 30-40% declines in their net worth. Things are a lot easier if you stick with the business fundamentals of excellent companies. You can avoid a lot of misery if you adopt the mindset of an old-school banker that constructed conservative portfolios for widows and orphans back in the day.

Source: The Crazy Thing About The 2008-2009 Stock Market Crash