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.
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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.
The Pipeline and Storage segment transports natural gas for third parties and manages five underground storage reservoirs in Texas. It also provides ancillary services to the pipeline industry, including parking arrangements, lending and inventory sales. As of September 30, 2020, it owned 5,684 miles of gas transmission lines.

Atmos Energy stock investors receive a 2.43% dividend. Morgan Stanley recently increased its $139 target price to $140. The consensus target is $125.63, and Thursday’s closing print of $111.37.
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Cardinal Health

This is a solid way for growth and income investors who are more conservative to play the health care sector. Cardinal Health Inc. (NYSE: CAH) is one of the largest drug and medical product distributors. The company generates approximately two-thirds of its profit from the pharmaceutical business and nearly one-third from its medical business.

The pharmaceutical distribution business supports retail/mail/hospital/physician clients, as well as drug manufacturers. The medical business manufactures its own portfolio of medical products and distributes brand-name products to hospitals and physicians.

Shareholders receive a 3.50% dividend. Morgan Stanley’s $74 price objective for Cardinal Health stock compares to a $63.00 consensus target and the most recent close at $55.83 a share.

Chubb

This giant insurer is a solid bet for worried investors now, and it also posted solid first-quarter earnings. Chubb Ltd. (NYSE: CB) provides insurance and reinsurance products worldwide. The company operates through the following segments.

Its North America Commercial P&C Insurance segment offers commercial property, casualty, workers’ compensation, package policies, risk management, financial lines, marine, construction, environmental, medical, cyber risk, surety and excess casualty, as well as group accident and health insurance to large, middle market and small commercial businesses.

The North America Personal P&C Insurance segment provides affluent and high net worth individuals and families with homeowners, automobile and collector cars, valuable articles, personal and excess liability, travel insurance and recreational marine insurance and services.

The North America Agricultural Insurance segment offers multiple peril crop and crop-hail insurance, as well as coverage for farm and ranch property and commercial agriculture products.

The Overseas General Insurance segment provides coverage for traditional commercial property and casualty; specialty categories, such as financial lines, marine, energy, aviation, political risk and construction risk; and group accident and health and traditional and specialty personal lines for corporations, middle markets and small customers through retail brokers, agents and other channels.
The Global Reinsurance segment offers traditional and specialty reinsurance under the Chubb Tempest Re brand to property and casualty companies.

Its Life Insurance segment provides protection and savings products comprising whole life, endowment plans, individual term life, group term life, medical and health, personal accident, credit life, universal life and unit linked contracts.
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The current dividend yield is 1.54% dividend. Goldman Sachs has a $253 target price, while the consensus target is near $234. Chubb stock closed at $203.88 on Thursday.

Colgate-Palmolive

This top dividend payer is also 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.

This segment markets and sells its products under various brands, including Colgate, Darlie, Sorriso, Tom’s of Maine, Irish Spring, Palmolive, Protex, Sanex, Softsoap, Lady Speed Stick, Speed Stick, EltaMD, Filorga, PCA SKIN, 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 and 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.

Investors receive a 2.40% dividend. The Stifel price target is $88, and the consensus target for Colgate-Palmolive stock is $82.06. Shares closed on Thursday at $75.12.

Hormel Foods

During even difficult times, people have to buy groceries, and this stock is a pure play in the consumer defensive arena. Hormel Foods Corp. (NYSE: HRL) develops, processes and distributes various meat, nuts and other food products to retail, food service, deli and commercial customers in the United States and internationally.

The company provides various perishable products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles and bacons, as well as such shelf-stable products as canned luncheon meats, nut butters, snack nuts, chilies, microwaveable meals, hashes, stews, tortillas, salsas and tortilla chips.
Hormel Foods also engages in the processing, marketing and sale of branded and unbranded pork, beef, poultry and turkey products. It offers nutritional food products and supplements, desserts and drink mixes, and industrial gelatin products. Its brands include Skippy, Spam, Hormel, Natural Choice, Applegate, Justin’s, Jennie-O, Café H, Herdez, Black Label, Sadler’s, Columbus, Gatherings, Wholly, Columbus, Planters, Planters Cheez Balls and Corn Nuts.

Hormel Foods stock comes with a 1.97% dividend. Last month, Argus upgraded the stock to Buy with a $57 price target. Thursday’s $47.81 close is higher than the $47 consensus target.
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Kimberly-Clark

This consumer staples leader is another safe bet for nervous investors. Kimberly-Clark Corp. (NYSE: KMB) manufactures and markets personal care and consumer tissue products worldwide. It operates through the following three segments.

The Personal Care segment offers disposable diapers, swim pants, training and youth pants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Depend, Plenitud, Softex, Poise and other brands.

The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brands.

The K-C Professional segment offers wipers, tissues, towels, apparel, soaps and sanitizers under the Kleenex, Scott, WypAll, Kimtech and KleenGuard brands.

The company sells its household use products directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets, as well as through other distributors and e-commerce. It sells away-from-home use products directly to manufacturing, lodging, office building, food service and public facilities, as well as through distributors and e-commerce.

Shareholders receive a 3.50% dividend. The price target on Kimberly-Clark stock at Jefferies is $146. The consensus target is $133.40, and Thursday’s final trade was reported at $129.05.

McDonald’s

The legacy fast-food heavyweight is a solid pick when the economy goes south, and it is among the safest large-cap restaurant plays. McDonald’s Corp. (NYSE: MCD) operates and franchises McDonald’s restaurants in the United States and internationally.

The company’s restaurants offer hamburgers and cheeseburgers, chicken sandwiches and nuggets, wraps, fries, salads, oatmeal, shakes, desserts, sundaes, soft serve cones, bakery items, soft drinks, coffee, and other beverages, as well as a breakfast menu, including biscuit and bagel sandwiches, breakfast burritos, hotcakes and other sandwiches. As of December 31, 2021, the company operated 40,031 restaurants.
McDonald’s earnings jumped a strong 19% a beat estimates in the most recent period. Revenue rose 10% to $5.67 billion, also topping forecasts. In addition, same-store sales, which is a huge metric for the company, jumped 11.8%. While that number represented a big drop from prior quarters, it was much better than gloomy Wall Street expectations. U.S. comparison rose 3.5%, barely eclipsing the consensus target.

Shareholders are paid a delicious 2.39% dividend. UBS has a Wall Street leading $290 target price. McDonald’s stock has a consensus target of $280.57, and the close on Thursday was at $229.00.
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PepsiCo

This top consumer staples provider soon will be supplying the goods for summer picnics, and the stock also resides on the Conviction List at Goldman Sachs. 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.

Its 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.

Shareholders receive a 2.81% dividend. The BofA Securities price target is $190. The consensus target is $183.75. PepsiCo stock ended Thursday trading at $161.20 per share.

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We purposely avoided big-box retail leaders after the dreadful numbers Target posted this week. We focused on companies that have products or services that are needed and purchased regardless of what the economy does. All these top stocks will continue to pay dividends to patient buy-and-hold investors until things brighten on the economic front. To be frank, it could be this time next year before we see solid improvement.

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