Though the labor market continues to improve, certain measures are beginning to show that inflation is slowing, moving away from the Federal Reserve's 2% target and not toward it. This could be a sign that the U.S. economy is getting weaker, despite having an unemployment rate of 4.3% in May, according to the U.S. Bureau of Labor Statistics.
But with the Fed looking like it's going to keep raising rates and certain sectors of the stock market looking a little shaky in recent days, investors may want to come back to a trade that's proved reliable in recent years -- dividends.
"While many would expect high dividend strategies to lag in such an environment, the opposite has been the case," RBC Capital Markets analysts led by Jonathan Golub wrote in a February 6 research note. "In fact, history shows that low volatility names - not high yielders - are actually the big underperformer as rates rise. Our work indicates that low volatility stocks have longer equity duration (more durable franchises), resulting in greater sensitivity to interest rates."
That may lead to investors looking to eschew the broader market averages (the NASDAQ is up nearly 17%, while the S&P 500 is up nearly 8% since the start of the year, in search of income.
Large companies with plenty of international exposure, including companies like Apple (AAPL - Get Report) , AT&T (T - Get Report) , Pfizer (PFE - Get Report) and others may decline less than the overall market or could hold up as volatility increases.
A company known for its iPhones, Apple is also a cash flow machine, generating enormous amounts of cash.
Since instituting its dividend and share repurchase program in 2012, Apple has raised its dividend every year, along with its share buyback program. It most recently raised its dividend by 10.5%, with a quarterly payout of 63 cents a share.
Apple has a 1.77% dividend yield, slightly below the 2.15% on the benchmark 10-year U.S. Treasury, but it also offers strong consumer adoption of its products and continuing innovation, like the recent HomePod speaker announced at its developer conference earlier this month.
AT&T is in the process of buying Time Warner (TWX) for $85.4 billion, but as a telecom, it provides stable free cash flow and a steady, high-yielding dividend that can offer protection against any market downturn.
At current prices, AT&T has a 5.03% yield, more than twice what the 10-year U.S. Treasury yields.
In addition, by adding Time Warner -- and its brands, including HBO and Warner Bros. -- AT&T may wind up adding additional protection to a recession, as content tends to outperform during market downturns.
Boeing has a 2.89% yield and has been one of the best performers in the Dow this year, with shares rising 25%.
At the Paris Air Show, the company announced it won several new orders, including ones for its new Boeing 737 MAX single aisle aircraft.
At a market cap of $198 billion, it's the world's third-largest independent biotech company.
Pfizer shares are flat on the year, underperforming the 8% gain in the S&P 500.
Shares of Merck are up nearly 5%, excluding dividends, year-to-date, compared to a 8% rise in the S&P 500.
Tyson Foods (TSN - Get Report) , best known for its chicken products, has a stable dividend and a share buyback, which could be cut if it fell on hard times to protect the dividend, according to Eric Ervin, CEO of Reality Shares.
The company, which sports a 1.46% yield, could see stability in fiscal 2018 as the environment for chicken, prepared foods and beef continues to get better.
"While the revised FY17 guide has elements of upside, we see stable Chicken, leverage in Prepared and a favorable Beef environment as all contributing to FY18 growth," KeyBanc Capital Markets analyst Brett Andress wrote in a February research note to clients.
"Tech has the strongest overall fundamentals," Ervin noted, with Texas Instruments' latest results highlighting the strength in the semiconductor industry.
Texas Instruments has a 2.46% yield. You don't need your trusty TI-89 to calculate that's a handsome payout.
It has a 1.47% yield and shares are up more than 7% since the start of the year.
"Favorable cost inputs and strong returns on marketing behind Muscle Milk, Wholly Guacamole, Skippy, Compleats, Justin's and Applegate Farms are driving the sales growth for the Grocery division," Credit Suisse analyst Robert Moskova wrote in a February research note to investors.
Shares of Hormel, which are negative on the year, have a 2.01% dividend yield.