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5 Dividend Stocks to Allay Fears of a More-Aggressive Fed

The Federal Reserve at each of its previous four meetings held this year, had raised the interest rate by 0.75 points to combat stubbornly high inflation. This was its fastest pace since the beginning of the 1980s. However, monetary tightening measures don’t bode well for the stock market as it curtails consumer spending and impacts economic growth.

But things certainly started to improve for the stock market, lately, on Fed Chair Jerome Powell’s comments that the central bank intends to reduce the pace of interest rate hikes in the coming Dec 13-14 meeting. It’s widely expected that the Fed would hike interest rates by 50 basis points instead of 75 basis points since inflation has shown signs of cooling in recent times.

Unfortunately, the major U.S. indexes took a beating on Dec 5. Hotter-than-anticipated service sector data coupled with a strong labor report fueled concerns that the Fed may yet again be compelled to take a more aggressive stance to tame inflation, consequently pushing the economy into a recession.

After all, a healthy economy indicates that consumers are willing to spend, which sooner or later would lead to an increase in the prices of essential commodities and services.

The barometer for the service sector of the U.S. economy, constituting banks and restaurants, to name a few, jumped to 56.5% in November, per the Institute of Supply Management, citing a MarketWatch article. While anything above 50% shows signs of expansion, anything above 55% indicates exceptional growth. In fact, analysts had actually expected the service sector index to drop to 53.7% from 54.4% in October, as mentioned in the MarketWatch article.

Meanwhile, November’s job report showed that wages increased more than 5% last month compared to a year ago, stroking fears that commendable wage growth could easily fuel inflation. As a result, the S&P 500 and the Nasdaq posted their worst performance in almost a month yesterday. The Dow, too, ended in negative territory. On the other hand, as stocks plunged, the CBOE Volatility Index climbed back above 20 in the last trading session, indicating more stressful periods in markets.

Still, investors should never panic! Instead, they should place their bets on dividend-paying stocks like Exxon Mobil XOM, WesBanco WSBC, S&T Bancorp STBA, Gilead Sciences GILD and Conagra Brands CAG for a steady stream of income this year and beyond.

Thanks to a solid business model, dividend-paying stocks remain protected from market gyrations. Currently, these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and offer high yields. You can see the complete list of today’s Zacks Rank #1 stocks here.

Exxon Mobil explores for and produces crude oil and natural gas in the United States and internationally. Exxon Mobil has a dividend yield of 3.31%. In the past 5-year period, XOM has increased its dividend four times, and its payout has advanced 2.4%. Check Exxon Mobil’s dividend history here.

XOM’s next 5-year projected earnings growth rate is 24.9%. Currently, XOM has a Zacks Rank #2.

WesBanco operates as the bank holding company for WesBanco Bank, Inc., which provides retail and corporate banking. WesBanco has a dividend yield of 3.39%. In the past 5-year period, WSBC has increased its dividend six times, and its payout has advanced 4.5%. Check WesBanco’s dividend history here.

WSBC’s next year projected earnings growth rate is 13.8%. At present, WSBC has a Zacks Rank #1.

S&T Bancorp operates as the bank holding company for S&T Bank that provides retail and commercial banking products and services. S&T Bancorp has a dividend yield of 3.39%. In the past 5-year period, STBA has increased its dividend six times, and its payout has advanced 5.1%. Check S&T Bancorp’s dividend history here.

STBA’s next quarter projected earnings growth rate is 14.7%. Currently, STBA has a Zacks Rank #1.

Gilead Sciences is a biopharmaceutical company. Gilead Sciences has a dividend yield of 3.28%. In the past 5-year period, GILD has increased its dividend five times, and its payout has advanced 6.9%. Check Gilead Sciences’ dividend history here.

GILD’s next 5-year projected earnings growth rate is 15.7%. Currently, GILD has a Zacks Rank #2.

Conagra Brands operates as a consumer-packaged goods food company in North America. Conagra Brands has a dividend yield of 3.46%. In the past 5-year period, CAG has increased its dividend three times, and its payout has advanced 11.2%. Check Conagra Brands’ dividend history here.

CAG’s next 5-year projected earnings growth rate is 7%. Currently, CAG has a Zacks Rank #2.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

Conagra Brands (CAG) : Free Stock Analysis Report

WesBanco, Inc. (WSBC) : Free Stock Analysis Report

S&T Bancorp, Inc. (STBA) : Free Stock Analysis Report

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