• Deutsche Bank predicts most aggressive monetary tightening since 1980s
  • Cash-rich companies with a history of paying dividends are one of the safest sectors in the market
  • Dividend stocks from industries such as consumer staples and healthcare are the least affected by the deteriorating economic environment
  • Looking for more blue chip stock ideas to add to your portfolio? InvestingPro+ members enjoy exclusive access to our research tools, data and shortlisted screeners. Learn more “

The rout in global stock markets that has wiped out $11 trillion since the end of March is a powerful sign that the US economy is heading for a hard landing following the Fed’s ultra-supportive post-pandemic effort.

According to a Deutsche Bank forecast, the Federal Reserve will likely have to undertake the most aggressive round of monetary tightening since the 1980s to cool the current four-decade high.

Against this backdrop, Goldman Sachs calculates that the risk of the world’s largest economy slipping into recession within the next two years currently stands at around 35%.

In such an uncertain economic environment, it is nearly impossible to completely avoid risk in stock markets, but it is possible to minimize it. The best way to do this is to diversify your portfolio and include cash-rich, defensive companies that have a history of paying dividends in good times and bad.

Dividend stocks from industries such as utilities, telecommunications and consumer staples are the least affected by the deteriorating economic environment as consumers cannot afford to cut services .

The resilience of their services and products makes them attractive to investors who fear the Fed may not be able to fight inflation without significantly increasing.

Below, we’ve shortlisted two such dividend-paying stocks for your consideration:

1. Coca-Cola

Atlanta-based food and beverage giant Coca-Cola (NYSE:) is an excellent, recession-proof, cash-rich company that has been issuing dividend checks for more than a century. This impressive track record shows the strength of its brands and its ability to survive in the most difficult economic times. KO closed Tuesday at $64.01.

The latest evidence of this unique combination came last month when Coca-Cola released its report. Demand for the company’s beverages has rebounded strongly after nearly two years of a pandemic-triggered crisis.

The maker of Sprite, Fanta and Simply reported revenue of $10.5 billion, producing more than 18% year-over-year growth, in line with analysts’ expectations.

And Coke is not alone. According to FactSet, nearly 90% of companies reporting this season posted earnings above analysts’ estimates. Across all industries in the index, this figure was close to 80%.

As part of its effort to grow beyond its eponymous brand and become a “total beverage company”, Coke is acquiring early-stage beverage companies to better resonate with health-conscious customers and find new areas of growth. His recent investments include Honest Tea, Fairlife Dairy and Suja Life.

Trading at $64.01 at yesterday’s close, Coke’s stock is earning 2.75% annually. This comeback might not sound too exciting, but the company has a long track record of increasing its payouts, for 58 consecutive years now.

With an annual dividend growth rate of 7% over the past 10 years, KO currently pays $0.44 per share per quarter.


Global pharmaceutical giant Pfizer (NYSE:) is another recession-proof contender with plenty of cash to satisfy income investors, especially after the global success of its COVID-19 vaccine created a source of permanent income to finance its dividend. Pfizer closed Tuesday at $49.49.

Pfizer weekly chart

The New York-based company currently pays a quarterly stock dividend of $0.4 with an annual dividend yield of 3.29%. This has averaged more than 6% per year over the past five years. However, that rate of escalation could improve if the company’s COVID-19 vaccine becomes a regular feature with booster doses and additional inoculation types.

Additionally, through mid-April, Pfizer said it had landed $32 billion in 2022 deals for its vaccine and $22 billion for its COVID pill, Paxlovid.

Company officials, led by Chief Executive Albert Bourla, said Pfizer’s mRNA vaccine appears capable of taking new variants of COVID-19. Thus, the product generated by inoculating global populations against COVID-19 is likely to persist long after the pandemic is over.

If Pfizer’s sales projections prove correct, the vaccine will climb to the highest rank of blockbuster drugs, outpacing metrics such as AbbVie’s (NYSE:) immunosuppressive therapy HUMIRA and Merck’s (NYSE:) cancer fighter 🙂 KEYTRUDA, according to Bloomberg estimates.

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