Inflation is a tad out of control – just a tad.
With the cost of gas, food, and housing, consumer inflation rocketed 7.9% year over year – the worst spike we’ve seen since 1982.
And, according to MarketWatch.com: “The numbers are eye-watering, and there is more to come,” said Eric Winograd, senior economist at asset management firm AllianceBernstein. “The peak in inflation will be much higher than previously thought and will arrive later than previously expected.”
Unfortunately, the White House expects to see “substantially” higher inflation moving forward, which is just so comforting to hear.
According to the Washington Examiner: “The White House Council of Economic Advisers noted that ‘there has been substantial run-up in energy prices since February resulting from the Russian invasion of Ukraine’ and that “energy and commodities prices will likely contribute substantially to inflation in the coming months.”
So, how can we protect our portfolios from the inflationary chaos?
One way is to buy stocks with attractive dividend yields, especially in companies with strong sales. Some of those companies include:
Devon Energy Corp. (DVN)
At the moment, DVN carries a dividend yield of 6.7%.
Since January, the stock has performed well, running from about $40 to about $60 with higher oil and gas prices. In February, it declared a record high fixed-plus-variable dividend of $1.00 per share based on the fourth-quarter financial performance. The dividend is payable on Mar. 31, 2022 to shareholders of record at the close of business on Mar. 14, 2022. It also expanded its share-repurchase authorization by 60% to $1.6 billion, or 5% of its market cap.
NextEra Energy (NEE)
The company provides a basic need service –electricity. Plus, since demand for electricity doesn’t a lot from one year to the next, the company is insulated. Two, the company has generated a positive total for investors in 19 of the last 20 years.
Three, the company carries a dividend yield of 2.12%.
BMO Capital analysts raised their price target on NEE to $98 from $89 with an outperform rating on the stock.
SPDR S&P 500 Dividend ETF (SDY)
One of the best ways to diversify at less cost is with an ETF, such as the SPDR S&P 500 Dividend ETF (SDY) – which, since inception, has returned about 9% average gains per year.
Even better, the ETF invests in companies that have consistently increased their dividends each year for the better part of the last 20 years. That includes AT&T, AbbVie Inc., Exxon Mobil Corporation, Chevron Corporation, National Retail Properties, IBM, and Cardinal Health to name a few of the top ones. Plus, the ETF carries a dividend yield of 2.8%.
