Worries about the economy have influenced the attitudes of consumers and investors alike. Many believe we will soon enter a recession (if we have not entered one already), and some fear stagflation, a combination of high inflation and unemployment, reminiscent of the 1970s.

However, even if the economy experiences stagflation, low-cost dividend stocks can do well in such an environment. One of these stocks is Texas Instruments (TXN 5.64%).

The case for Texas Instruments

Texas Instruments produces analog and embedded chips. These semiconductors do not receive as much attention as higher-end processors made by the likes of Nvidia and AMD. Still, digital chips can only represent zeros and ones. Analog chips can recognize continuous signals, which means that digital semiconductors need analog chips to function. These processors function as a bridge between the crisply defined digital world and the messy, complex realm of real-world data. This makes Texas Instruments' products essential to the latest technological advancements.

That need for chips will probably increase, which should help the stock even if stagflation weighs on growth. Fortune Business Insights forecasts a compound annual growth rate of 9% for the semiconductor industry through 2029. That means its size will grow from $483 billion today to an estimated $893 billion by that year.

Also, a book of business that claims around 80,000 products and 100,000 customers keeps the performance of this enterprise solid. About 62% of its revenue came from the industrial and automotive sectors in 2021.

Additionally, it also supports other business segments, and 24% of its revenue came from personal electronics last year. One customer, widely believed to be Apple, accounted for 9% of its revenue in 2021 and similar percentages in previous years.

How Texas Instruments holds up financially

Texas Instruments claims a substantial share of the chip market. In 2021, it generated $18.3 billion in revenue, a 27% year-over-year increase.

Still, the economic environment has affected the company. In the first quarter, revenue came in at $4.9 billion. At a 14% rate of increase from year-ago levels, growth was robust but slower. Net income during that period grew 26% to $2.2 billion as the company reduced its cost of revenue during that time by 2%.

Still, the pain will not end immediately as the company forecasts second-quarter revenue of between $4.2 billion and $4.8 billion. This modest forecast could mean declining revenue for a time as the company reported $4.58 billion in revenue in the second quarter of 2021. The recent stock price action could also reflect the struggles in its approximate 25% decline from its peak of $202 per share in October.

Nonetheless, investors should consider Texas Instruments' massive growth since the 2008-09 financial crisis. During that time, the stock generally rose in a sustained upward move after bottoming at just under $14 per share in March 2009. Given the forecast industry growth, the increases will probably resume longer term.

Moreover, Texas Instruments also trades at around 17 times earnings. In comparison, Analog Devices, one of its closest competitors, currently supports a 40 price-to-earnings (P/E) ratio. Also, as profits grow, the P/E ratio will fall, a factor that could serve as a catalyst even in a less-robust economic climate.

Additionally, the company's dividend growth should make Texas Instruments an excellent source of passive income in most market environments. The payout grew at a compound annual rate of 25% between 2004 and 2021. The annual dividend has grown to $4.60 per year, a cash yield of about 3% at current prices. That payout growth could help an investment pay off regardless of any near-term price action.

Consider the stock

In the end, investors would probably drive positive, long-term returns in Texas Instruments stock, regardless of how the overall market behaves. Indeed, the stock has fallen along with other semiconductor stocks. Moreover, the possibility of stagflation is not a positive for stocks overall.

However, with positive long-term growth still predicted, those slowdowns are likely temporary. As semiconductor demand grows and Texas Instruments' chips appear in more products, its low multiple and fast-growing dividend should attract investors regardless of the overall market.