It happens every 10 to 15 years, and the culprit usually is somebody or something that has been around for years. Silicon Valley Bank was founded in 1983 by former Bank of America managers Bill Biggerstaff and Robert Medearis to focus on the needs of startup companies. They came up with the idea over a game of poker and, in the end, the final result was that shareholders and depositors were dealt a very bad hand.
The mere fact that the bank did not have a risk officer for the past year is telling, as one would think that a qualified officer in that position would have never bought longer dated Treasury securities with yields at the lowest levels since the great financial crisis in 2008. The one-year Treasury bill was up 39 basis points to start 2023. It currently trades at 4.40%, and that is exactly why the bank failed. SVB took a $1.8 billion loss after the run on the bank that was led by Peter Thiel, who encouraged others to get their money out and then, according to recent reports, did not get some of his own money out.
So once again, like 1987, 1991, 1994, 1998, 2000-2002, 2008 and 2018, we stare into the abyss. This mess likely will get sorted out, and as usual, politicians after the fact will call for reforms. What should investors do now? Play it safe. Now is the time to buy short Treasury paper, because that 4.40% one-year looks enticing. For equity investors looking for safety, here are eight stocks rated Buy, that pay dependable dividends and are defensive in nature.
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 6.09% dividend. Raymond James has a Strong Buy rating and a $24 price objective. The consensus target for AT&T stock is $20.28, and shares closed on Friday at $18.13.
Coca-Cola
This top Warren Buffet holding offers safety. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.
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