9 Recession-Resistant Stocks With High Dividends: Thornburg’s McMahon
- Faced with a potential recession, Thornburg’s Brian McMahon targets robust companies.
- To generate a steady stream of income, he focuses on companies that generate high dividends and cash.
- McMahon shared 9 stocks that are both recession-proof and can increase revenue streams.
In the latest move in the ongoing, high-stakes fight against inflation, the Federal Reserve raised interest rates another 75 basis points at Wednesday’s FOMC meeting. While some investors have reacted to Fed Chairman Powell’s hawkish sentiments with pessimism, others have welcomed the rate hikes as a necessary — and long overdue — remedy to inflation that has raged at high levels for decades. decades.
“It will be an uphill battle to get inflation back below 3%,” said Brian McMahon, chief investment strategist at Thornburg Investment Management, which manages $42 billion in assets. “The Fed has done too little, for too long.”
In upcoming meetings, McMahon predicts that the central bank will continue to raise rates and agrees with the general consensus on Wall Street that rate cuts are unlikely to appear before at least end of 2023 or early 2024. “So far it looks like a safe landing, but it just feels a bit bumpy,” he told Insider in a recent interview.
Invest in resilient companies with high dividends
McMahon oversaw the Thornburg Investment Income Builder Fund (TIBIX) – which currently holds approximately $11 billion in assets – since its inception two decades ago. Because this fund aims to provide a steady flow of income to its investors, McMahon places particular emphasis on investing in high-quality fixed-income assets and dividend-paying stocks. In a macro environment like this, he targets robust companies that can weather a potential downturn.
“On the equity side, we’re more focused on companies that we believe have some resilience, some pricing power and balance sheets strong enough to weather a storm,” he explained.
McMahon also focuses on investing in companies that not only are able to pay a dividend, but have already demonstrated a willingness to increase those dividends. “Let’s hope for a dividend that will increase over time, so you must have a good cash-generating business,” he said.
According to McMahon, companies with strong fundamentals that generally operate with enough stable cash flow to pay attractive dividends often fall into the category. major telecommunications, pharmaceuticals, and Technology sectors.
McMahon shared nine stocks for investors to consider that are both recession-proof and can increase income streams. These stocks are listed below, along with each company’s ticker, market cap, and McMahon’s commentary.