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2 Top Recession-Proof Dividend Stocks to Buy Now: ATO, KMB
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Investors’ sentiment on Wall Street went from applauding a Goldilocks economy to outright recession fearmongering mostly due to a weakening labor market and contraction in factory activities (read more: Goldilocks US Economy to Boost Stock Price of ANET, QCOM, MU).
Since Americans are contemplating an economic slump ahead, investing in dividend-paying recession-proof stocks such as Atmos Energy Corporation (ATO - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) for a steady income makes all the more sense now.
Bloodbath on Wall Street
Wall Street’s pullback in the last trading session saw the Nasdaq enter correction territory and register a third straight losing week. The Nasdaq slipped 2.4% on Aug 2 and finished the week at 16,776.16, a 10% drop from its record high of 18,647.45 achieved on Jul 10.
Market participants fear that the Nasdaq may enter the bear market as tech stocks are primarily bottoming, and investors are rotating out of them and into small caps (read more: Rotation Trade May Prompt Stock Gains for AMPY, GLDD, TREE).
The broader S&P 500 also posted the third week of losses, while the outperforming 30-stock Dow snapped a four-week winning streak. Both the indexes were down 2% for the week.
Bad Economic News is Now Bad for Wall Street
For quite some time, discouraging economic reports acted as a blessing in disguise for stocks as they raised hopes of an interest rate cut soon. However, the recent soft labor market data coupled with the contraction in the manufacturing sector jacked up concerns about an imminent recession. As a result, stocks that would likely gyrate under recessionary conditions, such as JPMorgan Chase & Co. (JPM - Free Report) and The Boeing Company (BA - Free Report) , witnessed their shares tumble 2.3% and 6%, respectively, on Aug 2.
Market participants now believe the Federal Reserve has been slow in easing its aggressive monetary policy. The Fed is widely expected to trim elevated interest rates by a quarter point in the September meeting. However, fears of a disruption in consumer outlays have reemerged after the unemployment rate rose to 4.3% in July, the highest since October 2021, per the Labor Department. Also, 114,000 jobs were added in July, less than 179,000 new jobs in June. Analysts had expected the economy to add 185,000 new jobs last month (read more: Fed's September Rate Cut Bets Rise: NVDA, GOLD, PHM to Gain).
Weak manufacturing data is also showing signs of an economic downturn. The ISM manufacturing index declined to 46.8% in July from June’s reading of 48.5%. The manufacturing side of the economy contracted for the fourth consecutive month.
Recession Threats Resurface: ATO, KMB to Gain
Don’t shun equities as recession concerns float up. Instead, invest in defensive stocks that belong to the utility and consumer staples sectors. This is because demand for their products and services, such as electricity, water, gas, and food, are constant irrespective of market conditions.
At the same time, these stocks are dividend payers exhibiting a solid financial structure that can withstand market upheavals. We have, thus, selected two such stocks that should make meaningful additions to your portfolio. These stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Atmos Energy
Atmos Energy is involved in the natural gas distribution and storage business. ATO’s solid long-term capital expenditure plan and expansion in its industrial customer base will surely boost its bottom line.
The Zacks Consensus Estimate for ATO’s current-year earnings has increased by 1.2% over the past 60 days. The company’s expected earnings growth for the current year is almost 11%.
Kimberly-Clark
Kimberly-Clark manufactures and sells an array of consumer products worldwide. Kimberly-Clark’s consumer-focused approach and significant investments in product development will surely boost its profit margins.
The Zacks Consensus Estimate for KMB’s current-year earnings has increased by 2.7% over the past 60 days. The company’s expected earnings growth for the current year is 9.7%.
Shares of Atmos Energy and Kimberly-Clark have gained 12.2% and 15.3%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
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2 Top Recession-Proof Dividend Stocks to Buy Now: ATO, KMB
Investors’ sentiment on Wall Street went from applauding a Goldilocks economy to outright recession fearmongering mostly due to a weakening labor market and contraction in factory activities (read more: Goldilocks US Economy to Boost Stock Price of ANET, QCOM, MU).
Since Americans are contemplating an economic slump ahead, investing in dividend-paying recession-proof stocks such as Atmos Energy Corporation (ATO - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) for a steady income makes all the more sense now.
Bloodbath on Wall Street
Wall Street’s pullback in the last trading session saw the Nasdaq enter correction territory and register a third straight losing week. The Nasdaq slipped 2.4% on Aug 2 and finished the week at 16,776.16, a 10% drop from its record high of 18,647.45 achieved on Jul 10.
Market participants fear that the Nasdaq may enter the bear market as tech stocks are primarily bottoming, and investors are rotating out of them and into small caps (read more: Rotation Trade May Prompt Stock Gains for AMPY, GLDD, TREE).
The broader S&P 500 also posted the third week of losses, while the outperforming 30-stock Dow snapped a four-week winning streak. Both the indexes were down 2% for the week.
Bad Economic News is Now Bad for Wall Street
For quite some time, discouraging economic reports acted as a blessing in disguise for stocks as they raised hopes of an interest rate cut soon. However, the recent soft labor market data coupled with the contraction in the manufacturing sector jacked up concerns about an imminent recession. As a result, stocks that would likely gyrate under recessionary conditions, such as JPMorgan Chase & Co. (JPM - Free Report) and The Boeing Company (BA - Free Report) , witnessed their shares tumble 2.3% and 6%, respectively, on Aug 2.
Market participants now believe the Federal Reserve has been slow in easing its aggressive monetary policy. The Fed is widely expected to trim elevated interest rates by a quarter point in the September meeting. However, fears of a disruption in consumer outlays have reemerged after the unemployment rate rose to 4.3% in July, the highest since October 2021, per the Labor Department. Also, 114,000 jobs were added in July, less than 179,000 new jobs in June. Analysts had expected the economy to add 185,000 new jobs last month (read more: Fed's September Rate Cut Bets Rise: NVDA, GOLD, PHM to Gain).
Weak manufacturing data is also showing signs of an economic downturn. The ISM manufacturing index declined to 46.8% in July from June’s reading of 48.5%. The manufacturing side of the economy contracted for the fourth consecutive month.
Recession Threats Resurface: ATO, KMB to Gain
Don’t shun equities as recession concerns float up. Instead, invest in defensive stocks that belong to the utility and consumer staples sectors. This is because demand for their products and services, such as electricity, water, gas, and food, are constant irrespective of market conditions.
At the same time, these stocks are dividend payers exhibiting a solid financial structure that can withstand market upheavals. We have, thus, selected two such stocks that should make meaningful additions to your portfolio. These stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Atmos Energy
Atmos Energy is involved in the natural gas distribution and storage business. ATO’s solid long-term capital expenditure plan and expansion in its industrial customer base will surely boost its bottom line.
Atmos Energy has a dividend yield of 2.48%. ATO’s payout has advanced by 8.89% in the past five years. Check Atmos Energy’s dividend history here.
Atmos Energy Corporation Dividend Yield (TTM)
Atmos Energy Corporation dividend-yield-ttm | Atmos Energy Corporation Quote
The Zacks Consensus Estimate for ATO’s current-year earnings has increased by 1.2% over the past 60 days. The company’s expected earnings growth for the current year is almost 11%.
Kimberly-Clark
Kimberly-Clark manufactures and sells an array of consumer products worldwide. Kimberly-Clark’s consumer-focused approach and significant investments in product development will surely boost its profit margins.
Kimberly-Clark has a dividend yield of 3.48%. KMB’s payout has advanced by 3.39% in the past five years. Check Kimberly-Clark’s dividend history here.
Kimberly-Clark Corporation Dividend Yield (TTM)
Kimberly-Clark Corporation dividend-yield-ttm | Kimberly-Clark Corporation Quote
The Zacks Consensus Estimate for KMB’s current-year earnings has increased by 2.7% over the past 60 days. The company’s expected earnings growth for the current year is 9.7%.
Shares of Atmos Energy and Kimberly-Clark have gained 12.2% and 15.3%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research