Investing

8 'Strong Buy' Dividend Aristocrats Will Hold Up in the Coming Recession

Despite the way the financial news talking heads try to spin it, and Wall Street firms projecting that a recession is likely 12 to 24 months from now, we are teetering on one right now. The definition of a recession is two consecutive quarters of negative gross domestic product. First-quarter GDP decreased at an annual rate of 1.4%. Should that happen in the second quarter, that would technically place the economy in recession.

Toss in the surging inflation, gasoline prices at or near all-time highs across the United States and prices at the grocery store skyrocketing, and you have everything in place for consumer demand to fall. What we could end up with before all is said and done is a 1970s problem called stagflation. That is, a stagnant economy with serious inflation.

We suggest worried investors that want to stay in stocks trade in the high beta momentum names for safe and secure stocks that pay dependable dividends.

Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further. The following attributes are also mandatory for membership on the vaunted list:

  • Companies must be in the S&P 500 index.
  • They must be worth at least $3 billion at the time of each quarterly rebalancing.
  • Their average daily volume must be at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.

Regardless of what the stock market does, the Federal Reserve has to continue to raise rates until they can choke off the ongoing surge of inflation. So you can count on a 50-basis-point increase for sure in June and July, and more increases until the federal funds rate is near the 3.50% mark. It currently is at the 0.75% to 1.00% level.

We screened the Dividend Aristocrats looking for the very safest stocks to Buy and found eight that look like great ideas for worried investors. In addition to their almost guaranteed dividends, all are rated Buy at major Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Atmos Energy

This utility stock is perfect for conservative investors looking for income. Atmos Energy Corp. (NYSE: ATO) engages in the regulated natural gas distribution and pipeline and storage businesses in the United States.

The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3 million residential, commercial, public authority and industrial customers. As of September 30, 2020, it owned 71,558 miles of underground distribution and transmission mains.

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