There’s no question that this has been a challenging year for investors. Since hitting their respective all-time closing highs during the first week of January, both the Dow Jones Industrial Average and S&P 500 have tumbled into correction territory (i.e., fallen at least 10%). Things are even worse for the growth-dependent Nasdaq Composite , which shed nearly 30% of its value since hitting its record high in November.

This turbulence looks to be directly related to growing fears of a recession in the United States. First-quarter gross domestic product retraced by a surprising 1.4%, and historically high inflation certainly appears to be adversely affecting lower-income consumers, as evidenced by Walmart ‘s and Target ‘s latest operating results . Image source: Getty Images. Dividend stocks can be your golden ticket to riches

However, when examined with a wider lens, the latest corrections — including the Nasdaq bear market — serve as an opportunity for patient investors to pounce . Eventually, all notable declines in the market are completely wiped away by a bull market rally.

Arguably, one of the smartest ways to put your money to work during a recession is to buy dividend stocks . Companies that pay a dividend are often profitable on a recurring basis and are time-tested in the sense that they’ve navigated their way through recessions before.

What’s more, dividend stocks have a rich history of outperformance relative to their non-dividend-paying peers. According to a report from J.P. Morgan Asset Management, a division of the nation’s largest bank by assets, JPMorgan Chase , dividend stocks averaged an annual return of 9.5% between 1972 and 2012. Comparatively, public companies that didn’t offer a payout averaged a meager 1.6% annual return over the same time frame.

Dividend stocks have the potential to mitigate near-term downside, combat historically high inflation, and ultimately make patient investors richer over time.

What follows are three extremely safe high-yield dividend stocks for investors to buy if the U.S. dips into recession. Image source: Getty Images. AT&T: 5.49% yield

The first exceptionally safe high-yield income stock to buy with recession fears mounting is telecom behemoth AT&T ( T 0.94%). When adjusted for the company’s WarnerMedia spinoff, AT&T shares are actually higher for the year.

Even though AT&T’s high-growth glory days are long gone, the company does have a number of catalysts capable of generating modest organic growth and slowly but surely moving its share price higher.

For example, AT&T’s biggest catalyst is the 5G revolution . For the next couple of years, it’ll be investing billions of dollars in upgrading its wireless infrastructure to handle 5G. Because it’s been about a decade since consumers and businesses have been privy to a notable upgrade in wireless download speeds, the expectation is that we’ll witness a sustained device replacement cycle through the midpoint of the decade. The key here is that data consumption should increase as 5G becomes more widely available — and data happens to be where AT&T generates its juiciest margins from its wireless operations.

The other transformative move was the aforementioned spinoff of WarnerMedia, which was subsequently merged with Discovery to create a new media entity, Warner Bros. Discovery . The completion of this merger resulted in AT&T receiving $40.4 billion in cash. It also allowed the company to reduce its base annual payout to $1.11 from a little north of $2. Don’t worry; you’ll still be netting a healthy 5.5% yield.

What’s important is that the $40.4 billion in cash, along with the capital saved from paying a lower annual dividend, will help AT&T address some of the debt on its balance sheet . Having substantially more financial flexibility should allow AT&T, which is valued at an incredibly low forecast price-to-earnings ratio of 8 in 2022, to outperform in a challenging environment. Image source: Getty Images. AGNC Investment Corp.: 12.03% yield

Another extremely safe high-yield dividend stock to buy with recession fears growing is mortgage real estate investment trust (REIT) AGNC Investment Corp. ( AGNC 0.34%).

Without getting overly technical, mortgage REITs like AGNC aim to borrow money at low short-term rates and use this capital to purchase higher-yielding long-term assets, such as mortgage-backed securities (MBS) — that’s why they’re called “mortgage” REITs. The goal for these companies is to maximize their net interest margin, which is the difference between the average yield on assets owned minus their average borrowing rate.

One of the best aspects of the mortgage REIT industry is that it’s highly transparent. Investors simply need to look at Treasury yield curves and Fed monetary policy to get an […]

source 3 Extremely Safe High-Yield Dividend Stocks to Buy if the U.S. Dips Into Recession

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