Inflation has encouraged investors to look for solid dividend stocks to buy, and it makes sense. Strong dividends usually mean that management is taking care to generate profits.
Searching for the best dividend stocks to buy as a hedge during times of inflation has several advantages.
First, dividend stocks are less volatile. Second, dividend stocks provide a steady income stream that can help offset the rising costs of goods and services. Lastly, dividend stocks are often considered “all-weather” investments, meaning they perform well in both good and bad economic conditions.
The stocks on this list are some of the best dividend stocks to buy during periods of inflation. These established companies have strong operating models and are trading at a discount. Now is the time to invest in these companies.
Johnson & Johnson
Dick’s Sporting Goods
Johnson & Johnson (JNJ)
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Johnson & Johnson (NYSE:JNJ) is a diversified company with a strong track record of financial stability. Plus it is a reliable dividend payer. It has increased its dividend for 60 consecutive years, making it an attractive choice among the best dividend stocks to buy.
Johnson & Johnson offers investors a fair amount of downside protection.
In particular, the company’s focus on essential goods is often viewed as a “recession-resistant” business. Consumers still need Johnson & Johnson’s products even when spending is tight. With its broad range of products, this company has a competitive edge and is growing steadily. There are many benefits to investing in it, such as stability and growth.
Johnson & Johnson also happens to be trading at a huge discount after reporting its second-quarter results. The company’s sales were up 3.0% – beating analyst estimates. The company’s adjusted operational growth grew 8.1%.
Plus, its adjusted earnings per share increased 4.4% from last year even as the company decided to lower its profitability outlook for the full year. In the current climate, cutting guidance has an outsized effect on any stock. However, on the positive side, shares of the multinational conglomerate are trading at a nice discount to their 52-week high.
For all these reasons, Johnson & Johnson is an ideal dividend stock for long-term investors.
3M Company (MMM)
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3M Company (NYSE:MMM) is a household name in many countries, with operations spanning the globe. It is best known for its health care products like bandages and masks, but they also produce consumer goods such as Post-It notes that you can find at your local grocery store or gas station.
3M also produces other valuable surgical products, such as drapes, gowns, and masks. In addition, the company manufactures various products for the electronics and energy industries, including batteries, solar panels, and LCD screens. 3M is a global innovation leader and has more than 60,000 products to its name.
During times of inflation, the companies that will do well tend to be diversified conglomerates. 3M ticks that box because it has a product range that users will demand regardless of economic circumstances.
3M has the distinction of being a Dividend King. This is a select group of companies that have raised dividends yearly for at least the past 50 years, which makes this among the more reliable dividend stocks to buy. 3M has increased its annual dividend payout for more than 64 consecutive years of increases, which places it in an elite category.
Dicks Sporting Goods (DKS)
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Dick’s Sporting Goods (NYSE:DKS) has been a consistent performer for investors over the past few years. In these difficult economic times, it has managed to post strong numbers, showing the robustness of its business model. Dick’s has staying power making it one of the dividend stocks to buy and hold in the long term.
The stock is down almost 15% in the year thus far. The economy is slowing down, the inflation rate is rising and people are worrying more about their investments. This, in turn, causes pressure on stocks like Dick’s Sporting Goods.
The pandemic was a boon for sporting goods companies. Therefore, the company now faces tough year-over-year comparisons. However, Dick’s Sporting Goods is doing well considering the macro-economic environment.
In the last four quarters, it has consistently beat analyst expectations. Yes, revenues are declining; in the latest quarter, the top line shrank by 7.49%, and EPS fell 27.57% year on year. Also, the company is projecting comps to decline between 2% and 8% versus earlier guidance of flat to down 4%. However, management deserves credit for navigating the ship in troubled waters.
Besides, the company’s yearly dividend payout is a great way to shield yourself from the effects of volatility during these times. DKS has increased its dividend regularly, and its latest offering of 49 cents translates into an excellent yield.
On the publication date, Faizan 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.
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