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5 Top Recession-Proof Dividend Stocks to Buy in 2023
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The U.S. labor market continues to exhibit strength despite the Federal Reserve’s most aggressive monetary policy in nearly four decades and amid mass layoffs at tech bigwigs such as Amazon and Salesforce, to name a few.
The ADP National Employment report showed that private employers in the United States increased jobs by 235,000 in December, well above the estimate. Additionally, workers’ pay also improved.
Not only that, the number of Americans filing for unemployment benefits too declined last week. The Labor Department added that on a seasonally-adjusted basis, initial jobless claims for the week ending Dec 31, dropped to 204,000, its lowest level since September.
Unfortunately, healthy employment news raised concerns about more rate hikes this year. After all, an increase in employment may lead to an uptick in consumer outlays, and push prices of essential goods and services higher. But the Fed, at present, is bent on taming a considerably high rate of inflation toward its target range of 2%.
Minutes from the Fed’s December meeting had already shown that 19 top central bank officials don’t expect any cut in interest rates to be appropriate this year, and they are willing to wait for further evidence that inflation is declining at a sustainable rate. Lest we forget, Fed Chair Jerome Powell had said earlier that the labor market needs to weaken and prevent wage growth that can fuel inflation.
Thus, with the Fed expected to tighten its monetary policies amid a strong labor market, increase borrowing costs and dampen consumer outlays, the economy is certainly facing a recession shortly. The International Monetary Fund, too, had warned that one-third of the global economy may face a recession this year.
However, investors shouldn’t freak out! Defensive companies are generally recession-proof. These companies are non-cyclical in nature, or in other words, their performances are not dependent on the happenings in the larger equity market.
Defensive players belong to the healthcare, consumer staple and utility sectors. This is because consumers still need to purchase essential items, including medical care, food, electricity, natural gas, water and various other energy products, irrespective of the economic situation.
Further, dividend-paying defensive companies are even a better choice as it assures a steady stream of income. And why not? Dividend payers have solid business models that help them sail through any market upheaval.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers, and manufacturers. CAH currently has a Zacks Rank #2 and offers a dividend yield of 2.6%. The company’s expected earnings growth rate for the current year is 5.1%.
Conagra Brands is one of the leading branded food companies in North America. CAG currently has a Zacks Rank #2 and offers a dividend yield of 3.4%. The company’s expected earnings growth rate for the current year is 4.2%.
Ingredion is a solution provider specializing in nature-based sweeteners, starches and nutrition ingredients. INGR currently has a Zacks Rank #2 and offers a dividend yield of 2.9%. The company’s expected earnings growth rate for the current year is 5.9%.
Atmos Energy is engaged in the regulated natural gas distribution and storage business. ATO currently has a Zacks Rank #2 and offers a dividend yield of 2.6%. The company’s expected earnings growth rate for the current year is 6.6%.
NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial as well as commercial consumers in major competitive power markets in the United States. NRG currently has a Zacks Rank #1 and offers a dividend yield of 4.4%. The company’s expected earnings growth rate for the current year is almost 45%.
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5 Top Recession-Proof Dividend Stocks to Buy in 2023
The U.S. labor market continues to exhibit strength despite the Federal Reserve’s most aggressive monetary policy in nearly four decades and amid mass layoffs at tech bigwigs such as Amazon and Salesforce, to name a few.
The ADP National Employment report showed that private employers in the United States increased jobs by 235,000 in December, well above the estimate. Additionally, workers’ pay also improved.
Not only that, the number of Americans filing for unemployment benefits too declined last week. The Labor Department added that on a seasonally-adjusted basis, initial jobless claims for the week ending Dec 31, dropped to 204,000, its lowest level since September.
Unfortunately, healthy employment news raised concerns about more rate hikes this year. After all, an increase in employment may lead to an uptick in consumer outlays, and push prices of essential goods and services higher. But the Fed, at present, is bent on taming a considerably high rate of inflation toward its target range of 2%.
Minutes from the Fed’s December meeting had already shown that 19 top central bank officials don’t expect any cut in interest rates to be appropriate this year, and they are willing to wait for further evidence that inflation is declining at a sustainable rate. Lest we forget, Fed Chair Jerome Powell had said earlier that the labor market needs to weaken and prevent wage growth that can fuel inflation.
Thus, with the Fed expected to tighten its monetary policies amid a strong labor market, increase borrowing costs and dampen consumer outlays, the economy is certainly facing a recession shortly. The International Monetary Fund, too, had warned that one-third of the global economy may face a recession this year.
However, investors shouldn’t freak out! Defensive companies are generally recession-proof. These companies are non-cyclical in nature, or in other words, their performances are not dependent on the happenings in the larger equity market.
Defensive players belong to the healthcare, consumer staple and utility sectors. This is because consumers still need to purchase essential items, including medical care, food, electricity, natural gas, water and various other energy products, irrespective of the economic situation.
Further, dividend-paying defensive companies are even a better choice as it assures a steady stream of income. And why not? Dividend payers have solid business models that help them sail through any market upheaval.
Investors, therefore, should place their bets on dividend-paying recession-proof stocks such as Cardinal Health (CAH - Free Report) , Conagra Brands (CAG - Free Report) , Ingredion (INGR - Free Report) , Atmos Energy (ATO - Free Report) and NRG Energy (NRG - Free Report) . Currently, these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and offer high yields. You can see the complete list of today’s Zacks Rank #1 stocks here.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers, and manufacturers. CAH currently has a Zacks Rank #2 and offers a dividend yield of 2.6%. The company’s expected earnings growth rate for the current year is 5.1%.
Conagra Brands is one of the leading branded food companies in North America. CAG currently has a Zacks Rank #2 and offers a dividend yield of 3.4%. The company’s expected earnings growth rate for the current year is 4.2%.
Ingredion is a solution provider specializing in nature-based sweeteners, starches and nutrition ingredients. INGR currently has a Zacks Rank #2 and offers a dividend yield of 2.9%. The company’s expected earnings growth rate for the current year is 5.9%.
Atmos Energy is engaged in the regulated natural gas distribution and storage business. ATO currently has a Zacks Rank #2 and offers a dividend yield of 2.6%. The company’s expected earnings growth rate for the current year is 6.6%.
NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial as well as commercial consumers in major competitive power markets in the United States. NRG currently has a Zacks Rank #1 and offers a dividend yield of 4.4%. The company’s expected earnings growth rate for the current year is almost 45%.