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7 Dividend Stocks That Can Withstand Inflation

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  • Tyson Foods (NYSE:TSN): Higher prices won’t prevent people from eating.
  • Allstate (NYSE:ALL): With serious accidents on the rise, it’s time for insurance.
  • Weyerhaeuser (NYSE:WY): The soaring housing market is driving lumber demand.
  • Phillips 66 (NYSE:PSX): Fossil fuels still dominate, boding well for PSX.
  • EPR Properties (NYSE:EPR): A REIT specializing in experiential services, perfect for millennials.
  • Gladstone Capital (NASDAQ:GLAD): Specializes in lower-middle market companies.
  • Philip Morris (NYSE:PM): A cynical play to capitalize on rising stress levels.

Source: ShutterstockProfessional / Shutterstock.com

If you didn’t recognize the impact of inflation before the geopolitical flashpoint in eastern Europe, you’re certainly feeling it now. With gasoline prices soaring to $6 or $7 in some regions, the negative paradigm shift is palpable. Worse yet, inflation is essentially a tax on working Americans due to declining purchasing power. Still, you may be able to protect yourself with dividend stocks to buy.

Under this asset class, you have two potential mechanisms of success. First, dividend stocks are typically (though not always) tied to reliable and predictable businesses. Therefore, a chance exists that they could facilitate capital gains. Second, these assets provide passive income, which can significantly help buffet the shock of skyrocketing prices.

Indeed, as Laura Barclay, a senior portfolio manager at TD Wealth stated to BNN Bloomberg, the yield on investments like guaranteed investment certificates and government bonds can leave you “with a negative return on your money.” Instead, pivoting toward dividend stocks can help investors keep up with the rising cost of living.

Still, not every name will do. Below is an eclectic list of dividend stocks to serve various purposes and risk-reward profiles.

TSN Tyson Foods $86.21
ALL Allstate $137.44
WY Weyerhaeuser $37.91
PSX Phillips 66 $80.73
EPR EPR Properties $52.60
GLAD Gladstone Capital $11.86
PM Philip Morris $92.24

Dividend Stocks to Buy: Tyson Foods (TSN)

The corporate headquarters of Tyson Foods (TSN) in Chicago, Illinois. undervalued stocks

Source: Daniel J. Macy / Shutterstock.com

There’s really no point in beautifying the argument. When discussing dividend stocks like Tyson Foods, it all boils down to basic human realities. No matter how advanced we become as a society or no matter how low the economy plummets, we’ve got to eat. Being one of the top food industry specialists, you won’t have to worry about relevance.

TSN will always be relevant. True, you’re probably not going to get rich with buying the security — at least not very quickly. And if we’re being honest, the dividend yield of 2.15% is rather ho-hum, even compared to relatively boring dividend stocks. Still, when wealth protection against inflation is the goal, some exposure to Tyson makes sense.

For the fiscal year ended Sept. 30, 2021, the company generated $47 billion in revenue, up 9% from the year-ago tally. As well, net income last fiscal year grew to over $3 billion from under $2.1 billion in 2020. With no sign of demand slowing down, TSN is a solid bet among dividend stocks to buy.

Allstate (ALL)

A photo of a smartphone on the Allstate website

Source: madamF / Shutterstock.com

Back during the initial doldrums of the coronavirus pandemic, vehicle miles traveled slipped nearly 42% between February 2020 and April 2020. Because of the sudden erosion of traffic, auto insurance companies momentarily became largely irrelevant. As a result, insurance firms paid drivers a refund, though there’s ongoing controversy about shortchanging policy holders.

However, vehicle miles traveled has basically recovered to pre-pandemic norms, which unfortunately means more traffic accidents, thus necessitating dividend stocks like Allstate. But what has really stunned observers is the number of traffic deaths, which spiked during the new normal.

Alarmingly, we’re also seeing incidents of rage — road rage, air rage, you name it, people are going nuts. Even for purely cynical reasons, consumers need to protect themselves, which is at least part of the reason why ALL stock is up nearly 17% year-to-date.

And with a respectable yield of 2.48%, ALL is an intriguing idea among dividend stocks to buy.

Dividend Stocks to Buy: Weyerhaeuser (WY)

picture of a forest with mountains in the distance

Source: shutterstock

If memory serves me correctly, this is the first time in my nearly seven years contributing content for InvestorPlace that I’ve mentioned Weyerhaeuser. But that’s the crazy world we’re living in now. Structured as a real estate investment trust (REIT), Weyerhaeuser is a U.S.-based timberland company, owning nearly 12.4 million acres of timberlands domestically and managing an additional 14 million acres in Canada.

Ordinarily, I wouldn’t be thinking about such a business for dividend stocks to buy. However, skyrocketing demand for housing has resulted in multiple downwind catalysts, including spiking the price of lumber. With people screaming for new residential units to open up for the common folk, WY seems to enjoy an enviable upside pathway.

However, I must disclose that I’m personally hesitant about the housing euphoria under the concept that prices can only go up so much. As well, WY isn’t particularly attractive in the yield game with only 1.89% to pass onto stakeholders. Still, if you have a different view than me about the direction of real estate, WY could be an interesting pickup.

Phillips 66 (PSX)

Phillips 66 (PSX) gas station in the daytime

Source: Jonathan Weiss / Shutterstock.com

Spun off as an independent energy firm comprising of the midstream and downstream assets of ConocoPhillips (NYSE:COP), Phillips 66 might not seem like a natural place to find long-term dividend stocks, particularly as the geopolitical flashpoint demonstrates the vulnerabilities of energy dependencies. Plus, with the pivot toward electric vehicles, PSX appears anachronistic from certain angles.

However, the hard truth of the matter is that fossil fuels are incredibly difficult to quit. Short of nuclear power, you’re not going to find the energy density that’s readily available in hydrocarbons. Essentially, a one-gallon jug of gasoline will take a modern car about 30 miles. The equivalent number of electrons is not going to push an EV to that distance.

So, like it or not, investments like PSX are going to be relevant. And so long as conflict rages in eastern Europe, the global supply of crude oil will be limited, thus having a broad impact on prices. Thus, you probably can’t do anything about pain at the pump, but you can at least mitigate some of the damage through PSX and its 4.58% dividend yield.

Dividend Stocks to Buy: EPR Properties (EPR)

Commercial shopping center in a tropical climate

Source: mTaira / Shutterstock.com

A distinct REIT, EPR Properties specializes in experiential services. What exactly does that mean? We’re talking about investments in properties that are tied to movie theater chains, theme parks, entertainment venues, ski resorts, gaming facilities (the gambling, that is) and more. While such a business category suffered a sizable hit from the Covid-19 pandemic, the return of consumer sentiment should benefit EPR stock.

Further down the horizon, investors can potentially profit from this REIT due to the millennial demographic. For one thing, millennials represent the largest demographic in the U.S. workforce, meaning that they’re the most important demo economically. Second, multiple studies have demonstrated that younger consumers prefer experiences over attainment of physical objects.

Under this framework, EPR is basically the millennial’s REIT. But it’s not just young consumers. As we finally navigate our way out of the Covid mess, high-contact businesses should normalize, boding well for the stock. In the meantime, you can enjoy its massive 6.29% yield.

Gladstone Capital (GLAD)

Two business men shaking hands in a sunny setting

Source: Shutterstock.com

Partnering with management teams, entrepreneurs and private equity sponsors, Gladstone Capital helps provide financing for lower middle-market companies. On paper, GLAD sounds like one of the riskiest dividend stocks to buy and you’re not going to see me bring up a contrarian view. Betting on smaller ventures is always financially dangerous due to the volatility involved.

However, you could also bring up the other side of the argument that smaller firms tend to have a lower profile. Therefore, while the big blue chips suffer heavy flak, smaller-capitalization firms can fly under the radar. As well, investors are not unrewarded for taking on the higher risk, as evidenced by Gladstone providing a very healthy 6.6% yield.

Finally, what might seal the deal for those specifically seeking dividend stocks to counter the impact of inflation is the payout frequency. Facilitating monthly passive income, GLAD basically operates on the cadence of everyday life.

Dividend Stocks to Buy: Philip Morris (PM)

An image of a cigarette and an e-cigarette side-by-side on a wood surface.

Source: vfhnb12 / Shutterstock.com

A terribly cynical idea among dividend stocks, Philip Morris is nevertheless an effective one — assuming you can get over the ickiness factor. Specializing in cigarette and tobacco products, the multinational firm is not going to win any ESG (environmental, social, governance) awards, that much is virtually guaranteed. However, when times get tough, PM could be worth a look.

Here’s where the cynicism comes in. While research demonstrates that smoking actually increases anxiety and tension, it also as an immediate effect creates a sense of relaxation. Therefore, users light up under the belief that smoking alleviates stress. From pandemics to inflation to armed conflicts, there’s simply no shortage of incidents to fret over.

Not only that, Philip Morris seems to be responding quite well to this narrative. In 2021, the company generated $31.4 billion in revenue, up over 5% from 2019’s tally of $29.8 billion (and up 9.4% from the pandemic-disrupted 2020).

If you’re still feeling queasy, a 5.34% yield could help seal the deal.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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