While the ongoing Russia-Ukraine saga stays in the headlines, the item that Wall Street is still the most focused on is the raging inflation that continues to push higher. The January and February readings for both the consumer and producer price indexes came in white hot. While some feel that we could be close to a peak in the highest inflation numbers in 40 years, citing solid retail sales, among other items, others feel that the peak may not hit until the summer or even later in the fall.
If there is any data set that can stir arguments among economists it is probably consumer and producer price index numbers, and with good reason. Rising consumer and producer prices can signal the start of an inflationary period for an economy, and even moderate inflation can rapidly erode purchasing power and can create uncertainty as businesses have more difficulty estimating future costs.
With the bond market seeing an inversion between the five-year and 10-year notes, many see a recession and stagflation on the way. So we screened the Goldman Sachs Conviction List of top stock ideas looking for companies that pay among the biggest dividends and offer a degree of safety in a volatile climate on Wall Street. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
If any industry is recession and inflation proof, it is insurance, and this market leader is a very solid long-term idea. American International Group Inc. (NYSE: AIG) offers insurance products for commercial, institutional and individual customers in North America and internationally.
The General Insurance segment provides general liability, environmental, commercial automobile liability, workers’ compensation, casualty and crisis management insurance products; commercial, industrial and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, crop and marine insurance.
AIG also provides professional liability insurance products for a range of businesses and risks, including directors and officers, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. In addition, it offers personal auto and property insurance, including homeowners, umbrella, yacht, fine art and collections; voluntary and sponsor-paid personal accident; supplemental health products; extended warranty insurance products; and travel insurance products.
The Life and Retirement segment offers variable annuities, index and fixed annuities and retail mutual funds. It also offers financial planning and advisory services; record-keeping, plan administrative and compliance services; and term life and universal life insurance. The company provides stable value wrap products and structured settlement and pension risk transfer annuities, as well as corporate- and bank-owned life insurance and guaranteed investment contracts.
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Shareholders receive a 2.02% dividend. The Goldman Sachs target price for American International Group stock is $115. Analysts have a consensus target of $67.54, and shares closed trading on Wednesday at $63.49.
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