This volatile climate has left many investors squinting through the fog, searching for dividend stocks for an inflation hedge.
It’s been a rollercoaster ride for investors, a year brimming with unpredictability, especially concerning personal finances. A potential recession looms on the horizon while inflationary pressures continue to weigh down the market sentiment. Hence, this
Dividend stocks are not just a shelter; they provide additional cash inflows, soothing the sting of inflation. These stocks can effectively act like short-duration financial instruments, offering immediate cash to reinvest.
Also, the best stocks to buy for inflation protection often increase their payouts quicker than inflation, giving them an edge over other securities. In the following discourse, we’ll delve into the top dividend stocks for inflation.
Barrick Gold (GOLD)
Mining behemoth Barrick Gold’s (NYSE:GOLD) financial forecast shines brightly with the price of gold on a bullish run. The firm capitalized on the upward trend in gold and silver, brushing off the underperformance of copper.
Its robust portfolio of high-quality assets is pivotal, positioning the firm as a valuable player in the mining sector.
The firm attracts a relatively impressive profitability rank of 7/10 from GuruFocus. Its profitability metrics are virtually in line with its historical performances. It boasts a strong dividend profile, yielding over 2.3% and a 5-year dividend growth rate of more than 27%.
The company has paid a dividend for the past 27 consecutive years, which dwarfs the sector average of eight years. Additionally, Tiprank’s analysts believe the stock is trading at a 48% discount to its intrinsic value.
Cheniere Energy Partners (CQP)
Cheniere Energy Partners (NYSEAMERICAN:CQP) puts forth an intriguing narrative in the electrifying energy realm. While renewable energy and electric vehicles have stolen the spotlight, this stalwart of the liquid natural gas (LNG) sector remains unfazed.
Cheniere’s expansive operations, stretching across the Gulf Coast, represent an unmatched infrastructure that’s nothing short of remarkable.
The company’s latest earnings report unleashed a wave of optimism, defying predictions of a downturn in the LNG market. Distributable cash flows are projected at a robust $5.7 billion to $6.2 billion, which should have its investors salivating over its prospects.
The firm’s shareholder-friendly stance shines through in its commitment to share repurchases and a noteworthy $896 million reduction in long-term debt in the first quarter. Cheniere’s dividend growth rate has been at an astounding 53% in the past year.
Bank of America (BAC)
Bank of America (NYSE:BAC) is effectively navigating the tumultuous waves of the financial space. After the Silicon Valley Bank fallout in March, the banking juggernaut was in choppy waters.
The unexpected news triggered a major sell-off of bank stocks, including giants like Bank of America, tumbling down a steep slope.
Ironically, the crisis seemingly paved the way for a surprising silver lining for Bank of America.
In the aftermath, the banking titan saw a major influx of $15 billion in deposits as jittery consumers and businesses sought refuge in the bank’s well-established stronghold. In underscoring its resilience, the bank posted impressive 9.2% year-over-year sales growth and a 15.5% surge in income for its first quarter.
With it handling over $3 trillion in assets, this high-quality bank offers a 3% yield with nine consecutive years of dividend growth.
When it comes to the bubbling world of beverages, Coca-Cola (NYSE:KO) reigns supreme. Perhaps what’s most impressive is its monstrous free cash flow base.
It ended last year with a refreshing $11 billion in 2022, with forecasts predicting a fizzy rise to over $17 billion by 2030, a massive 54% gain. Despite the inflationary pressures, it continues to deliver the slow and steady growth it’s known for.
Its profitability metrics are also firmly in the green, blowing past historical averages.
Embracing the spirit of innovation, the world-renowned non-alcoholic beverage giant is now stirring up the alcoholic beverages sector.
With strategic moves such as acquiring Finlandia vodka through Coca-Cola HBC and introducing ready-to-drink Jack Daniels and Coke cans in the UK, the firm is making serious inroads into the premium spirits market.
Coca-Cola is part of the elusive dividend king group quenching shareholders’ thirst for 60 consecutive years with a steady increase in its dividend, currently boasting a yield of 3.01%.
Kraft Heinz (KHC)
Kraft Heinz (NASDAQ:KHC) continues to outperform its competition in the bustling pantry of the consumer staples space.
Riding the pandemic-led tailwinds, the company has outshone the broader market, filling up investor baskets with substantial long-term value. The incredible blend of strong performance and resilience has made Kraft Heinz a delectable pick among its peers.
The firm’s recent upgrade to its full-year forecast is a testament to its robust first-quarter performance and the likely relief from supply chain and transportation costs.
It delivered a mighty impressive 10.3% year-over-year surge in adjusted EBITDA, hitting the $1.48 billion mark, despite the headwinds in its first quarter. Moreover, it served up an encouraging forward guidance on the back of strong efficiency gains and margin improvements.
Clearly, Kraft Heinz, with its hefty dividend yield of more than 4.4% and trading at just 1.7 times forward sales, remains an excellent bet.
American Electric Power (AEP)
It’s tough to deny the allure of utility stocks for investors seeking reliable dividends, and American Electric Power (NASDAQ:AEP) is a prime example. The firm is dexterously riding the wave of increased electricity demand spurred by a population surge in their 11-state service area, including Texas.
AEP is also actively shaping the future of energy. They’ve been investing heavily in transmission and have seen a noteworthy uptick in their commercial and industrial load. Its robust growth strategy and a dedicated push towards clean energy are putting AEP at the forefront of the energy transition.
Adding a cherry on top, AEP has taken thoughtful steps to simplify and de-risk its business. By offloading non-core assets and pouring resources into regulated utilities, AEP keeps its operations lean and carving a path toward future growth.
It boasts an A-rated dividend profile, yielding almost 4%, with dividend growth of 13 consecutive years.
With a sizzling 13% bump in comparable store sales in its most recent quarter, McDonalds’s (NYSE:MCD) is serving up some serious gains for its investors.
The restaurant giant continues to perform on the back of its successful franchising strategy, coupled with a rise in demand through its delivery and drive-thru channels.
The fast-food giant, known for its affordable luxuries, is a beacon of resilience, weathering the current economic challenges with aplomb.
Hence, as the craving for Big Macs continues unabated, its revenue surge should bolster its 2.1% dividend yield. Additionally, its core market strength and robust profitability further support its dividend. McDonald’s looks set to raise its distribution over time, a treat for those looking for a solid dividend stock.
With the workforce gradually trickling back into the office, breakfast sales at restaurants, including McDonald’s, are boosting. Therefore, the future seems to hold much promise for McDonald’s stock.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines