While the ongoing Russia-Ukraine saga stays in the headlines, what Wall Street is the most focused on is the raging inflation that continues to push higher. The January and February readings for the consumer and producer price indexes came in white hot, and March is looking to be just as disconcerting. While some feel that we could be close to a peak in the highest inflation numbers in 40 years, citing solid retail sales among other items, others feel that the peak may not hit until this summer or later in the fall, if then.
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If any data set can stir arguments among economists, it is probably consumer and producer price index numbers, and with good reason. Rising consumer and producer prices can signal the start of an inflationary period for an economy, and even moderate inflation can rapidly erode purchasing power and can create uncertainty, as businesses have more difficulty estimating future costs.

With the bond market seeing an inversion between the two-year and 10-year notes, albeit briefly, many see a recession and stagflation on the way. So, we screened the Goldman Sachs Conviction List of top stock ideas looking for companies that pay reliable dividends and offer a degree of safety in a volatile climate 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.

Constellation Brands

If any company has products that stay in style, it is this one, which only has 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.

The company is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.

Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.

Constellation Brands stock investors receive a 1.31% dividend. Goldman Sachs has a $275 price target, and the consensus target is $272. The stock was last seen Wednesday trading at $231.81 a share.

Fifth Third Bancorp

This top super-regional bank stock remains incredibly cheap and is a beneficiary of higher interest rates. Fifth Third Bancorp (NASDAQ: FITB) is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent of Fifth Third Bank, National Association, a federally chartered institution.
As of March 31, 2021, the company had $207 billion in assets and operated 1,098 full-service banking centers and 2,383 Fifth Third branded ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. In total, Fifth Third provides its customers with access to approximately 53,000 fee-free ATMs across the United States.

Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2021, had $464 billion in assets under care, of which it managed $58 billion for individuals, corporations and not-for-profit organizations through its Trust and Registered Investment Advisory businesses.
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Shareholders receive a 2.93% dividend. The Goldman Sachs price target on Fifth Third Bancorp stock is $55. That compares with a $51.61 consensus target and the most recent close at $40.98 per share.

Merck

This remains a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.

The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.

Investors receive a 3.25% dividend. Goldman Sachs has set a $93 target price. Merck stock has a consensus target of $92.38, while Wednesday’s closing print was $84.97.

NRG Energy

This stock has made a nice run off the lows and is another solid idea for investors who are more conservative. NRG Energy Inc. (NYSE: NRG) operates as an integrated power company in the United States that produces, sells and delivers electricity and related products and services to 3.6 million residential, industrial and commercial consumers.

The company generates electricity using natural gas, coal, oil, solar, nuclear and battery storage. It also provides system power, distributed generation, renewable products, backup generation, storage and distributed solar, demand response, energy efficiency, advisory and on-site energy solutions, as well as carbon management and specialty services.
In addition, NRG trades in electric power, natural gas and related commodities; environmental products; weather products; and financial products, including forwards, futures, options and swaps. Further, the company procures fuels; provides transportation services; and directly sells energy, services and products and services to retail customers under the NRG, Reliant, Green Mountain Energy, Stream, XOOM Energy and other brand names.

Investors are paid a 3.57% dividend. The $51 Goldman Sachs price objective is well above the $45.45 consensus figure. NRG Energy stock closed at $39.51 on Wednesday.
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PepsiCo

This top consumer staples provider soon will be supplying the goods for spring and summer picnics. PepsiCo Inc. (NYSE: PEP) operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips and Fritos corn chips.

The Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, natural granola and oat squares, as well as the recently name-changed Aunt Jemima mixes and syrups, and Quaker Chewy granola bars, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes.

PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Tropicana Pure Premium, Sierra Mist and Mug brands, as well as ready-to-drink tea and coffee, and juices.

Holders of PepsiCo stock receive a 2.49% dividend. The Goldman Sachs price target of $178 is a bit lower than the $179.94 consensus target. Shares closed on Wednesday at $172.39.

Phillips 66

This extremely diversified energy company has a long and successful operating history. Phillips 66 (NYSE: PSX) operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The company holds many of these assets within its master limited partnership, Phillips 66 Partners.

The company is able to benefit from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that are not ideal master limited partnership assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.
After it posted stellar results for the latest quarter, Goldman Sachs had this to say:

Phillips 66 remains our top idea within our Refining coverage, where we continue to see headroom for incremental capital returns this year, are constructive on a positive rate of change at Refining in 2022, and continue to see attractive non-refining value in Midstream, Marketing, and Chemicals.

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The dividend yield is 4.30%. The Phillips 66 stock target price at Goldman Sachs price target is $99. The consensus target was last seen at $99.77, and shares closed on Wednesday at $85.68.

Realty Income

This is an ideal stock for growth and income investors looking for a safer, inflation-busting idea for 2022. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income.

The company is structured as a real estate investment trust (REIT), and its monthly distributions are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants.

To date, the company has declared 604 consecutive common stock monthly dividends throughout its 52-year operating history and increased the dividend 109 times since its public listing in 1994, and it is a member of the S&P 500 Dividend Aristocrats index.

Investors receive a 4.13% distribution monthly. Goldman Sachs analysts have an $86 price target. The $77.25 consensus target for Realty Income stock is closer to the $71.78 a share close on Wednesday.

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The rally off the lows has been very nice, but the market is running out of gas and will be running into some very strong headwinds. Not the least of which will be continued high energy prices when the summer driving season rolls around in a couple of months. Toss in some aggressive interest rate hikes in May and June, and we could be in for some strong turbulence going forward. All these companies can weather those potential storms better than most.

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