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7 Anti-Inflation Stocks to Buy to Create Income Streams


Although December’s consumer price index information may seem to bode well for cost-of-living momentum, buying inflation-fighting stocks is still a good idea. For one thing, it’s probably not a good idea to make wholesale strategy changes based on one month’s worth of data. Second, the money supply has increased dramatically, which means a lot of work needs to be done to contain it. Therefore, investors should not give up buying stocks that fight inflation.

Looking ahead, everyone guesses what will happen this year. Indeed, with so many wild events that have erupted over the past three years, few experts will want to bend over backwards. That’s why companies that pay dividends enjoy great prominence right now, including those inflation-fighting stocks.

CLColgate-Palmolive$77.85
ERSSempra Energy$160.83
PSXPhillips 66$103.03
IBMIBM.$145.89
PMPhilip Morris$101.70
VZVerizon$41.86
BHPBHP Group

Colgate Palmolive (CL)

Source: monticello / Shutterstock.com

As a candidate for the anti-inflationary stock purchase, Colgate-Palmolive (NYSE:CL) logic. The personal care giant is posting a forward yield of 2.41%, beating the average Consumer Staples sector yield of 1.89%. While not the most generous payout, the company also boasts 60 consecutive years of dividend increases.

Basically, Colgate-Palmolive enjoys inelastic demand. Essentially, people should generally aim to brush their teeth three times a day, as well as flossing at least once a day. More than likely, a recession will not change this regime. If people skip a dentist appointment or two, they will continue to brush their teeth.

According to analysts, CL is considered a moderate buy by consensus. Among 12 experts, five of them rate CL as a buy while the others say hold. Nevertheless, the general increase in exposure among hedge funds – even if the immediate sentiment may be negative – could be a good sign for the future.

Sempra Energy (SRE)

The Sempra (SRE) logo is seen on top of an office building.

Source: Michael Vi / Shutterstock.com

If you’re looking for anti-inflation stocks to buy, you probably can’t go wrong with utilities. At the base of the necessary services that modern societies need, these entities benefit from an almost permanent demand. Specifically, Southern California Sempra Energy (NYSE:ERS) can be one of the best ideas to mitigate the price hike.

On the one hand, Sempra has a forward yield of 2.85%. To be fair, it’s a bit below the average Utilities sector return of 3.75%. However, the company enjoys 18 consecutive years of annual dividend increases. And while his payout ratio isn’t low at nearly 48%, it’s certainly not the highest payout ratio you’ll see. It’s good for durability.

Second, Sempra benefits greatly from geography. Namely, California represents the engine of the American economy, generating a GDP of $3.4 trillion. Speak Los Angeles Times, the Golden State could also become the fourth largest economy in the world. Like it or not, Sempra is here to stay, making it one of the most attractive stocks to fight inflation.

Philips 66 (PSX)

Person holding the glowing world in his hands with icons with different types of energy. Energy values; energy storage

Source: PopTika / Shutterstock

While both of the companies above benefit from reliable and dependable demand structures, we are also talking about mitigating price increases. In other words, inflation-fighting stocks to buy should feature more robust payouts. Fortunately, the energy giant Phillips 66 (NYSE:PSX) helps provide such passive income. At the time of writing, the company is showing a forward yield of 3.77%.

Admittedly, critics might point out that this payout is below the average energy sector return of 4.24%. Additionally, the company has only two consecutive years of dividend increases. Still, Phillips 66 deserves to be considered one of the inflation-fighting stocks, in part because of its payout ratio. At 31.23%, it is a weak and therefore credible measure.

Basically, Phillips 66 should benefit from social normalization trends, especially in the workplace. As large companies end remote working for all five working days of the week, the volume of travel will increase. This should be very useful for PSX, where the underlying business specializes in the downstream (refining and marketing) component of the energy value chain.

IBM (IBM)

Photo of the IBM (IBM) building seen through the canopy of a tree. The IBM logo is in large letters on the side of the building.

Source: shutterstock.com/LCV

Even though IBM (NYSE:IBM) ply its trade in the exciting tech industry, Big Blue itself isn’t very interesting. For longer than it probably cares to admit, the company has retained legacy businesses that have suffered from a loss of relevance. Yet, with strategic shifts and key acquisitions, IBM now represents a silent overachiever. For example, over the past year, stocks have gained nearly 10% of equity value.

On the topic of anti-inflationary stocks, IBM is currently showing a forward yield of 4.52%. This metric ranks well above the tech sector average return of 1.37%. In addition, the company enjoys 29 consecutive years of dividend increases. While his payout ratio sounds a bit hot at 66.1%, it’s not the hottest stat ever.

In addition, IBM benefits from important relevances. Yes, we may be heading into a global recession. But that won’t stop tech companies from innovating. Along with its artificial intelligence unit, IBM commands significant relevance with its enterprise-level cybersecurity services. Therefore, Big Blue will likely be among the inflation-fighting stocks to buy.

Philip Morris (PM)

Packs of cigarettes in convenience store rack

Source: defotoberg / Shutterstock.com

With Philip Morris (NYSE:PM), this company represents an example of not shooting the messenger. Naturally, some people may disagree with the company as it makes up the ranks of the world’s big tobaccos. At the same time, I write for a large audience. Therefore, I have no right to assume the sensitivity of each. Even those who may be hesitant with PM will have a hard time ignoring passive income. Currently, Philip Morris is posting a forward yield of 5%. Again, the average return for the Consumer Staples sector sits at 1.89%. Additionally, PM benefits from 14 years of increasing dividends, a trend I’m sure management will want to continue.

As for the fundamentals, globally the prevalence of smoking has declined, which doesn’t seem to support Philip Morris. However, many people still take advantage of their adult freedoms and choose e-cigarettes or vaporizers. Philip Morris has invested in this relatively new platform, making it an intriguing (albeit controversial) idea among inflation-fighting stocks.

Verizon (VZ)

Verizon store sign. Action VZ.

Source: Shutterstock

To be completely transparent, if you want a more conservative approach with your inflation-fighting stocks, you should consider some of the names above. With Verizon (NYSE:VZ), the narrative admittedly gets incredibly tricky. On the one hand, you are looking at a rather large market loss, losing almost 22% over the previous year.

From another angle, the company arguably deserves the spinoffs. Largely due to Verizon’s aggressive marketing initiatives in 2021, the following year’s volatility hurt VZ stock. As a result, Verizon has been met with criticism and pessimism from analysts.

While entertaining, it’s also fair to point out that investors hit hard by rising prices could give the telecommunications giant another look. That’s because Verizon offers a forward yield of 6.24%. In particular, the average return of the communications sector is at a relatively low level of 2.62%. Additionally, Verizon is enjoying 18 consecutive years of dividend increases. Finally, the company currently enjoys a moderate buy consensus. Therefore, if you want to take a picture, you will not be the only one.

BHP (BHP)

Smartphone with BHP Group logo in front of BHP website. BHP stock.

Source: T. Schneider / Shutterstock

If you really want to take your inflation-fighting stocks to the next level, you might want to consider a metals and mining company BHP (NYSE:BHP). For starters, the Australian stalwart was one of the few winners of 2022. And over the following year, BHP gained nearly 17% in equity value. Indeed, short-term sentiment is highly valued, with stocks up nearly 41% in the past six months.

Basically, geopolitical hotspots have hampered the global supply of critical resources. Therefore, Western-friendly countries such as Australia will play a more vital role in international trade. Specific to BHP, the company specializes in many critical resources, such as copper and nickel. Both feature prominently in advanced solutions such as electric vehicles.

Of course, the biggest reason some investors may consider BHP one of the inflation-fighting stocks to buy is probably the payout. With a forward yield of 10.1%, stakeholders could earn passive income in excess of the annual market returns of some stocks. However, the downside is that the payout rate sits at a stratospheric 127.2%. Yet, due to its heightened fundamental relevance, BHP remains intriguing.

As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

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

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