As traders deal with greater volatility after a hot inflation reading this week, Morgan Stanley believes it’s the perfect time for dividend stocks and found some top picks. “We analyzed inflation and rate regimes and found that when inflation is above trend and falling (today’s environment), this is one of the best performing regimes for high dividend stocks,” read a Thursday note from Morgan Stanley. Dividend stocks have gained in popularity this year, especially among long-term investors who are seeking stable returns regardless of the market backdrop. Currently, traders are approaching a seasonally brutal time for markets. Still, not all dividend stocks are created equal, and Morgan Stanley’s bottom-up analysts advise investors find the “dividend sweet spot” — stocks with a proven track record of consistent growth, instead of those names with the highest yield. “It’s this underlying stability combined with the dividend return that can provide a defensive cushion during market turbulence — similar to today’s environment,” read the note. Here are five top picks. Energy Transfer is a top dividend stock pick, according to Morgan Stanley. The firm’s Robert Kad, who covers the stock, said the company has “one of the best catalyst paths to re-rate through the back half of the year.” AT & T issues among the highest dividend yields in the S & P 500. Analyst Simon Flannery approves of the company’s investment-grade balance sheet, and he noted that capital expenditures should peak next year after 5G spending is completed. “The company is growing revenues modestly driven by strong wireless net adds and a growing consumer Fiber business,” Flannery wrote. Citizens Financial Group is among the banks “best positioned to deliver attractive returns to dividend investors,” according to analyst Betsy Graseck, who triangulated firms between dividend yield, dividend growth and risk. Simon Property Group and Coca-Cola Company are also in this list. —CNBC’s Michael Bloom contributed to this report.