It is starting to look like a replay of “That ’70s Show,” and not the one that starred Ashton Kucher. Rather, the one that played out through the 1970s and into the early 1980s. Stagflation (a stagnant economy with inflation) in the 1970s was a combination of very high inflation with dreadful economic growth. Massive government spending and budget deficits, lower interest rates, the Arab oil embargo and the collapse of managed currency rates all contributed to a horrific decade.
While the current situation is starting to look like what happened 50 years ago, the difference at this juncture is that interest rates are the highest in over 15 years. First-quarter gross domestic product came in at 1.1%, much lower than expected, and almost all of it was driven by consumer spending still fueled in part by pandemic savings, which is being used up fast and consumers are starting to turn to credit cards for purchasing power.
Meanwhile, inflation as measured by the core personal consumption expenditures price index (one of the Federal Reserve’s favorite benchmarks), which strips out food and energy, rose 4.6% from a year earlier, higher than the 4.5% economists had expected. That compares with a revised 4.7% in February and is well above the Fed’s 2% target.
So what can investors do now? Defensive companies with products and services that stay in demand regardless of the economy make sense, especially if they pay reliable dividends. We screened out 24/7 Wall St. safe growth and income universe and found eight stocks that make sense now. While they all are Buy rated 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.
AT&T
The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.
Its Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.
AT&T also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.
It markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.
Investors receive a 6.30% dividend. BofA Securities has a $25 price objective on AT&T stock. The consensus target is $20.88, and the stock closed on Friday at $17.67.
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