It is starting to look like a replay of “That ’70s Show,” and not the one that starred Ashton Kucher. Rather, the one that played out through the 1970s and into the early 1980s. Stagflation (a stagnant economy with inflation) in the 1970s was a combination of very high inflation with dreadful economic growth. Massive government spending and budget deficits, lower interest rates, the Arab oil embargo and the collapse of managed currency rates all contributed to a horrific decade.
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While the current situation is starting to look like what happened 50 years ago, the difference at this juncture is that interest rates are the highest in over 15 years. First-quarter gross domestic product came in at 1.1%, much lower than expected, and almost all of it was driven by consumer spending still fueled in part by pandemic savings, which is being used up fast and consumers are starting to turn to credit cards for purchasing power.

Meanwhile, inflation as measured by the core personal consumption expenditures price index (one of the Federal Reserve’s favorite benchmarks), which strips out food and energy, rose 4.6% from a year earlier, higher than the 4.5% economists had expected. That compares with a revised 4.7% in February and is well above the Fed’s 2% target.

So what can investors do now? Defensive companies with products and services that stay in demand regardless of the economy make sense, especially if they pay reliable dividends. We screened out 24/7 Wall St. safe growth and income universe and found eight stocks that make sense now. While they all are Buy rated on Wall Street, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AT&T

The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.

Its Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.

AT&T also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.

It markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.

Investors receive a 6.30% dividend. BofA Securities has a $25 price objective on AT&T stock. The consensus target is $20.88, and the stock closed on Friday at $17.67.

This top Warren Buffet holding offers safety. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.
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The company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Shareholders receive a 2.87% dividend. Citigroup’s $74 target price for Coca-Cola stock compares with a consensus target of $69.88 and the most recent close at $64.15.

Colgate-Palmolive

This top dividend payer is a very safe play for investors. Colgate-Palmolive Co. (NYSE: CL) manufactures and sells consumer products worldwide. The company operates through two segments.

The Oral, Personal and Home Care segment offers toothpaste, toothbrushes, mouthwash, bar and liquid hand soaps, shower gels, shampoos, conditioners, deodorants and antiperspirants, skin health products, dishwashing detergents, fabric conditioners, household cleaners and other related items. It markets and sells its products under various brands, including Colgate, Darlie, Sorriso, Tom’s of Maine, Irish Spring, Palmolive, Softsoap, Lady Speed Stick, Speed Stick, EltaMD, Filorga, Ajax, Axion, Fabuloso, Murphy, Suavitel, Soupline and Cuddly, to a range of traditional and e-commerce retailers, wholesalers and distributors. It also includes pharmaceutical products for dentists and other oral health professionals.

The Pet Nutrition segment offers pet nutrition products for everyday nutritional needs under the Hill’s Science Diet brand, as well as a range of therapeutic products to manage disease conditions in dogs and cats under the Hill’s Prescription Diet brand. This segment markets and sells its products through pet supply retailers, veterinarians and e-commerce retailers.

Colgate-Palmolive stock investors receive a 2.41% dividend. The $86 UBS price target is well above the consensus target of $79.94. Shares closed almost 3% higher on Friday at $79.80 in the wake of strong quarterly results.

Dominion Energy

Many of the Wall Street firms that we cover are still very positive on utilities, and this company is highly rated. Dominion Energy Inc. (NYSE: D) is an American power and energy company that operates through the following four segments:

• The Dominion Energy Virginia segment generates, transmits and distributes regulated electricity to residential, commercial, industrial and governmental customers in Virginia and North Carolina.
• The Gas Distribution segment engages in the regulated natural gas gathering, transportation, distribution and sales activities, as well as distributes nonregulated renewable natural gas. This segment serves residential, commercial and industrial customers.
• The Dominion Energy South Carolina segment generates, transmits and distributes electricity and natural gas to residential, commercial and industrial customers in South Carolina.
• And the Contracted Assets segment is involved in the energy marketing and price risk activities.

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Dominion Energy’s portfolio of assets included approximately 30.2 gigawatts of electric generating capacity; 10,500 miles of electric transmission lines; 85,600 miles of electric distribution lines; and 94,200 miles of gas distribution lines. It serves approximately 7 million customers. The company sells electricity at wholesale prices to rural electric cooperatives and municipalities, as well as into wholesale electricity markets.

The dividend yield here is 4.66%. Guggenheim has its target price at $63. Dominion Energy stock has a $62.45 consensus target, and Friday’s last trade was for $57.14 a share.

Enterprise Products Partners

This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides a wide variety of midstream energy services, including gathering, processing, transportation and storage of natural gas, natural gas liquids (NGL) fractionation, import and export terminaling, and offshore production platform services.

One reason many analysts may have a liking for the stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the master limited partnerships.

Investors receive a 7.45% distribution. The Morgan Stanley price target is $33, while the consensus target is $32.05. Enterprise Products Partners stock closed on Friday at $26.31.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit. Kraft Heinz Co. (NASDAQ: KHC) was formed almost six years ago in the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House. Buffett holds a big position in the stock at Berkshire Hathaway.

The company is the third largest food and beverage manufacturer in North America and derives 76% of revenues from that market and 24% from overseas. The company’s other brands include ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Kraft Heinz stock comes with a 4.07% dividend. It is on the BofA Securities US 1 list of top picks. The firm’s $48 price target compares with a $42.89 consensus target. Friday’s close was at $39.27.

This company has continued to grow global market share and its stock makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the international cigarette/heated tobacco market. Key combustible brands include Parliament, L&M and Marlboro, one of the most valuable brands in the world.
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Philip Morris is commercializing IQOS, a heat-not-burn product, in over 40 markets, which could drive earnings in the years to come. Most on Wall Street believe the company offers superior underlying growth prospects, both near term and long term. The share price has been weak of late as investors have questioned the growth potential of its reduced-risk products, and the overall market weakness has contributed. All of its sales are outside of the United States.

Shareholders receive a 5.08% dividend. Philip Morris International stock has a $120 price objective at Goldman Sachs. The consensus target is $113.29, and shares closed well below both levels at $99.97 on Friday.

Walmart

The retail giant is a top idea for investors looking for winners during difficult times. Walmart Inc. (NYSE: WMT), the world’s largest retailer, operates retail stores under the formats of Walmart Stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States, as well as a growing e-commerce business. Internationally Walmart also operates locations in several countries, including Argentina, Brazil, Canada, China, Japan, Mexico and the United Kingdom.

Each week, nearly 260 million customers and members visit the company’s 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries. It had fiscal 2021 revenue of nearly $560 billion, and Walmart employs approximately 2.2 million associates worldwide.

The dividend yield is 1.51%. The KeyCorp price target is $175, and the consensus target is $164.73. Walmart stock closed on Friday at $150.97.

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These top stocks have reasonable upside to the Wall Street price targets, and they all come with dependable dividends. With even moderate appreciation in their share prices, investors should be looking at double-digit total return potential. In addition, the squeeze put on everybody’s pocketbooks makes all these attractive, especially in the consumer arena, as they should easily ride the storm out until prices stabilize.

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