AT&T (NYSE: T) and Cisco (NASDAQ: CSCO) are generally regarded as conservative income investments rather than high-growth plays. AT&T still pays a forward dividend yield of 5.4% following its spin-off of Warner Bros. Discovery (NASDAQ: WBD), and Cisco pays a forward yield of 3.5%. Should investors buy either of these blue chip tech stocks as defensive plays against inflation, rising interest rates, and other macro headwinds?
In periods of rising inflation and slowing economic growth, investors often turn to the stability and reliability of dividend stocks to see them through the tough times -- and with good reason. The asset managers at Hartford Funds studied the performance of the benchmark S&P 500 going all the way back to 1930, looking at stocks that pay dividends and those that don't, and found over that near-100-year period, dividend-paying stocks contributed 41% to the index's total return. It also includes the so-called "lost decade" of the 2000s, where the dot-com bubble, 9/11, and the financial markets collapse all conspired to generate negative returns for the S&P 500, but dividend stocks still gained 1.8%.