If you were a big fan of “That ’70s Show,” get ready because we may soon get a revival, and it will likely not be as entertaining. Many across Wall Street feel that the looming specter of stagflation may be right around the corner, and with good reason. By definition, stagflation is a stagnant economy weakened by inflation. While the sticky inflation component remains in place, the stagnant economy is now being discussed on Wall Street just like it was 50 years ago.
The Federal Reserve may face a delicate balancing act: if it maintains accommodative policies to support growth, it risks fueling inflation; however, aggressive tightening to combat inflation could trigger economic stagnation. Additionally, structural changes in the global economy, including deglobalization trends, reshoring of manufacturing, and the energy transition, may create inflationary pressures while temporarily reducing productivity growth. Many of the ingredients that contributed to the 1970s stagflation persist today. As mentioned above, high commodity prices, massive budget deficits, and profligate government spending are just a few of the factors contributing to the turmoil. While the president is trying to curb government spending and reduce the outrageous debt levels, he is also tasked with persuading other countries to treat the United States fairly by imposing tariffs. Some feel that could also lead to stagflation-like conditions.
Now is the time to consider dividend stocks that perform well during periods of stagflation. We screened our 24/7 Wall St. Dividend King research database for stocks in sectors that historically outperformed during stagflation, including value stocks, commodities, aerospace and defense, real estate investment trusts, consumer staples, utilities, and more. Five companies appear to be great ideas now, and all are rated Buy at top Wall Street firms.
Why do we cover stagflation-resistant Dividend Kings stocks?
Companies that have raised their dividends for shareholders for 50 years or longer are the kind of investments that passive income investors need to own. Dependability is crucial for individuals seeking to increase their annual income through dividend stock investments. This is especially important during times of economic distress.
Altria
Altria Group Inc. (NYSE: MO | MO Price Prediction) is one of the world’s largest producers and marketers of cigarettes and tobacco-related products. This tobacco company offers value investors a great entry point. Altria manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.
The company provides cigarettes primarily under the Marlboro brand, as well as:
- Cigars and pipe tobacco, principally under the Black & Mild and Middleton brands
- Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
- on! Oral nicotine pouches
- e-vapor products under the NJOY ACE brand
It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.
Altria used to own over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. Last year, the company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of its holdings but still leaves 8% of the outstanding shares in its back pocket. Altria also announced a $2.4 billion stock repurchase plan partially funded by the sale.
Altria increased its quarterly dividend earlier this year by 4.1%, from $0.98 to $1.02 per share, marking its 59th dividend increase in the past 55 years.
Bank of America has a Buy rating with a $72 target price.
Fortis
Fortis is a leader in the regulated gas and electric utility industry in North America and is a very safe Dividend King. This is an off-the-radar utility stock that will benefit significantly if interest rates are lowered. Fortis Inc. (NYSE: FTS) operates as an electric and gas utility company in Canada, the United States, and the Caribbean.
It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona and 103,000 retail customers in Arizona’s Mohave and Santa Cruz counties. Its aggregate capacity is 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MW of wind capacity.
The company also sells wholesale electricity to other entities in the western United States, owns gas-fired and hydroelectric generating capacity totaling 65 MW, and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada.
In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities.
Furthermore, the company distributes electricity on the island portion of Newfoundland and Labrador, with an installed generating capacity of 145 MW, and on Prince Edward Island, with a generating capacity of 90 MW.
Additionally, it provides integrated electric utility service to approximately:
- 69,000 customers in Ontario
- 275,000 customers in Newfoundland and Labrador
- 34,000 customers on Grand Cayman, Cayman Islands
- 17,000 customers on certain islands in Turks and Caicos
Raymond James has an Outperform rating with a target price of $52.
National Fuel Gas
National Fuel Gas Co. (NYSE: NFG) distributes and transports natural gas to hundreds of thousands of customers in Western New York and Northwestern Pennsylvania. This stock is poised to break out to new 52-week highs and has delivered a stunning 39.9% total return for investors this year. National Fuel Gas is a diversified energy company.
It operates through four segments:
- Exploration and Production
- Pipeline and Storage
- Gathering
- Utility
The exploration and production segment explores, develops, and produces natural gas and oil.
The pipeline and storage segment provides interstate natural gas transportation services through an integrated gas pipeline system in Pennsylvania and New York, and it owns and operates underground natural gas storage fields.
This segment also transports natural gas for the National Fuel Gas Distribution and other utilities, industrial companies, and power producers in New York State.
The Gathering segment builds, owns, and operates natural gas processing and pipeline gathering facilities in the Appalachian region, providing gathering services to Seneca.
The Utility segment sells natural gas or provides natural gas utility services to various customers in:
- Buffalo
- Niagara Falls
- Jamestown
- Erie and Sharon in Pennsylvania
Bank of America has a Buy rating with a target price of $107.
PepsiCo
This top consumer staples stock reported solid second-quarter earnings, and PepsiCo Inc. (NYSE: PEP) will continue to supply all the goods for football tailgates and parties. It is a worldwide food and beverage company. Activist investor Elliott Investment Management recently took a $4 billion stake in PepsiCo, revealing a strategy to unlock value within the company’s iconic brand by focusing on core strengths, such as innovation and brand marketing, rather than its capital-intensive bottling operations. This move caused PepsiCo’s stock to surge, with Elliott believing the company could see over 50% upside if its proposed strategic changes were implemented. However, these changes would involve a very long-term transformation.
Its Frito-Lay North America segment offers:
- Lays and Ruffles potato chips
- Doritos, Tostitos, and Santitas tortilla chips
- Cheetos cheese-flavored snacks, branded dips
- Fritos corn chips
The company’s Quaker Foods North America segment provides:
- Quaker Oatmeal
- Grits
- Rice cakes
- Natural granola and oat squares
- Pearl Milling mixes and syrups
- Quaker Chewy granola bars
- Cap’n Crunch cereal
- Life cereal
- Rice-A-Roni side dishes
PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:
- Pepsi
- Gatorade
- Mountain Dew
- Diet Pepsi
- Aquafina
- Diet Mountain Dew
- Tropicana Pure Premium
- Sierra Mist
- Mug brands
Citigroup has a Buy rating with a $168 price objective.
United Bancshares
United Bankshares Inc. (NASDAQ: UBSI) is a bank holding company with dual headquarters in Charleston, West Virginia, and Fairfax, Virginia. This mid-cap financial company also offers solid total return potential now, in a sector that has performed well over the past year. United Bancshares primarily provides commercial and retail banking products and services in the United States.
It operates through two segments:
- Community Banking
- Mortgage Banking
The company accepts:
- Checking, savings, and time and money market accounts
- Individual retirement accounts and demand deposits
- Statement and special savings
- NOW accounts
Its loan products include:
- Commercial loans and leases to small to mid-size industrial and commercial companies
- Construction and real estate loans, such as commercial and residential mortgages
- Loans secured by owner-occupied real estate
- Personal, student, and credit card receivables
- Personal, commercial, and floor plan loans
- Home equity loans
In addition, the company offers credit cards, safe deposit boxes, wire transfers, and other banking products and services, as well as investment and security services. It also provides services to correspondent banks, including buying and selling federal funds, automated teller machine services, and internet and telephone banking services.
Furthermore, it provides community banking services, including asset management, real property title insurance, financial planning, mortgage banking, brokerage services, investment management, and retirement planning.
Raymond James has a Buy rating with a $42 target price.
Five Strong Buy Dividend Stocks That Wall Street Analysts All Love
Top Gaining Stocks
Top Losing Stocks