Despite the economic slowdown, prices continue to go up for reasons other than economic growth. The Stagflation phenomenon was first experienced in the 1970s due to an oil crisis.
Now, it’s happening again thanks to a combination of COVID-19 and the war in Ukraine, causing increased oil prices, supply chain shortages and a slowdown of the economy.
Here are seven stocks that investors should consider while we wade through a period of stagflation.
Blackstone is an alternative investment company that focuses on various assets, including real estate, private equity, public debt and hedge fund solutions. The company doubled its free cash flow from 2020 to 2021 and paid out a generous 4.56% dividend. Blackstone’s focus on tangible assets and cash flow should serve them well moving forward.
Blackstone closed today’s trading session at $91.23 per share, up +0.21% on the day. YTD, BX stock is down -27.96%.
If one thinks that gold is the way to go during bad times, then B2Gold should be up for consideration. They own productive gold mines in three countries across two continents; gold production is expected to be 10% more in 2022 over 2021. The company also pays out a 3.8% dividend.
B2Gold closed trading today at $4.36 per share, down -3.54% on the day. YTD, BTG stock is down -9.92%.
With a location seemingly never too far away, CVS is the largest pharmacy chain in the U.S. The company’s pharmacy business is one of the most durable on the market, setting them up in a great position to weather stagflation. CVS has exceeded free cash flow expectations, posting an all-time high of $15 billion in free cash flow in 2021. CVS also pays a 2.33% dividend.
CVS Health last traded at $92.66 per share, down -0.71% on the day. YTD, CVS stock is down -11.04%.
With the price action of oil over the last few months and no end to the war in Ukraine in sight, this list could have been seven oil companies. In the interest of diversification, we’ll stick to the largest U.S. oil company. The world runs on their product, and there’s currently a shortage of it, so their business should be rock solid moving forward. While the rest of the non-oil market is going down, Exxon is posting impressive gains. Exxon’s 4.05% dividend is just icing on the cake.
Exxon Mobil closed trading on Thursday at $85.64 per share, down -2.83% on the day. YTD, XOM stock is up +34.78%.
The very definition of a household name, Johnson & Johnson, probably has multiple products in the home of anyone reading this article. JNJ is one of the largest pharmaceutical companies in the world while also being one of the biggest names in consumer goods. The demand for its products is interwoven into our daily lives and isn’t going away anytime soon. The company’s 61 straight years of raising its dividend (it yields 2.48% currently) is a testament to its ability to persevere through good and bad times.
Johnson & Johnson closed Thursday at $177.51 per share, up +0.3% on the day. YTD, JNJ stock is up +3.48%.
The leading grocery company in the United States, Kroger is another company whose products will forever remain in demand. While inflation is rising food prices dramatically, people have no choice but to pay. Moreover, food has proven to be resistant to online shopping, so physical grocery stores are here to stay. Kroger is one of the few stocks that are not negative in 2022 and pays a 2.15% dividend.
Kroger last traded at $47.33 per share, down -1.62% on the day. YTD, KR stock is up +4.74%.
The most recognized name in hamburgers is also one of the most durable stocks on the market. While most stocks are down well within double digits in 2022, Mickey D’s is holding up relatively well. Cheap food in a timely manner will never go out of style and should even see increased demand in lean times. It’s little wonder that the company has raised dividends each year since 1976; the dividend yield currently sits at 2.23%.
McDonald’s closed trading today at $246.88 per share, down -0.37% on the day. YTD, MCD stock is down -8.08%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.