Three Dividend Stocks With 4%+ Yield to Protect Against Stubborn Inflation
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Three Dividend Stocks With 4%+ Yield to Protect Against Stubborn Inflation

These companies can aid investors with regular income streams.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Inflation remains stubborn despite the fastest interest rate hike cycle since the 1980s. According to a Dow Jones economists survey, the Labor Department reported a 0.3% monthly consumer price index (CPI) rise in January vs. an expected 0.2%.

Annually, CPI is up 3.1%. Although this is a decrease from December’s 3.4% inflation rate, it still surpassed the expected 2.9%. The main culprit for the discrepancy is the uptick in shelter prices, up by 6% annually and 0.6% on a monthly basis.

At the same time, real weekly earnings dropped by 0.3%. Since real average hourly earnings increased only 1.4% from a year ago, inflation is still outpacing wage growth. Fortunately, investors can patch the difference with dividend stocks.

Here are three dividend stocks with dividend yields above 4% to offset stubborn inflation.

Newmont Corporation Inc. (NASDAQ: NEM) – 4.77% dividend yield at $1.6 annual payout per share

Newmont caters to institutional investors and companies needing gold, silver, copper, and other metals and minerals. Having a steady dividend growth of 11 months, Newmont’s business model revolves around exploring mining sites, developing them, and engaging in consulting, royalties, and investments.

Founded in 1921 in Colorado, Newmont reported its latest earnings in October for Q3. With 1.3 million attributable ounces of gold and 10k tonnes of copper, the company generated $2.5 billion in revenue. This is 3.8% lower than a year-ago quarter of $2.6 billion. However, investors should remember that gold prices rise during economic downturns and money supply tampering by central banks.

Newmont’s free cash flow went from negative $63 million to positive $397 million in that period. The company’s net debt increased from $2.4 billion in Q3 ‘22 to $2.9 billion in Q3 ‘23. Because net debt to adjusted EBITDA has been maintained at a 0.7x ratio, Fitch rated NEM stock as “A-,” giving it a “stable outlook” in October.

This aligns with significantly increased cash generation from continuing operations, going up to $1 billion from $466 million in a year-ago quarter. Over the last three months, NEM stock is down -6.34%. 

Based on 17 analyst inputs pulled by Nasdaq, NEM stock is a “strong buy. ” The average NEM price target is $47.62 vs. the current $32. The high estimate is $59, while the low forecast is above the current price level at $39 per share.

Camden Property Trust (NASDAQ: CPT) – 4.25% at $4 annual payout per share

As a Real Estate Investment Trust (REIT), Camden must distribute at least 90% of taxable income to shareholders as dividend payouts instead of a corporate income tax. 

Camden’s income source primarily comes from multifamily apartment communities in the US, focusing on high-growth markets revolving around migration and employment mobility. As of the latest Q4 2023 earnings delivered in February, Camden’s year-over-year revenue growth went up 5.1%.

The trusts’ net operating income (NOI) increased by 4.3% between 2022 and 2023. The property occupancy rate remained the same, at 94.9% in Q4 ‘23 vs 95.8% in Q4 ‘22.

In addition to positive revenue growth, Camden’s funds from operations (FFO) increased to $6.78 annually per diluted share compared to $6.59 in a year-ago quarter. Camden built 1,166 homes across communities worth $438 million for the year.  

Based on 24 analyst inputs pulled by Nasdaq, CPT stock is a “buy.” Over the last three months, CPT shares have been up 3.46%. The average CPT price target is $104.79 vs. the current $91. The high estimate is $138, while the low forecast is aligned with the present price level at $90 per share.

Nutrien Ltd. (NASDAQ: NTR) – 4.23% dividend yield at $2.12 annual payout per share

Nutrien is an essential cog in food production as it sells fertilizers, seeds, crop protection products, and other services between distributors and suppliers. The company conducts market reach directly and indirectly via government agencies, financial institutions, and agriculture organizations. 

As of the latest Q3 2023 earnings delivered in November, Nutrien revised full-year 2023 net earnings guidance to $4.15 – $5.00 per share from the previous $3.85 – $5.60 per share range. Nutrien’s sales decreased 23% from $30.3 billion to $23.4 billion compared to a year-ago quarter nine months trailing.

For the same period, the company’s expenses went up 26%, while net earnings decreased by 83% to $1.1 billion. This is largely the result of higher interest on short-term debt and higher average short-term and long-term debt balances. 

Following the latest CPI report, the fed fund futures price in the first interest rate cut in June at 77% probability. With this in mind, just like agriculture, Nutrien is a cyclical stock.

The demand for Nutrien’s products will likely rise substantially in 2024. According to Rabobank, potash applications (compounds used in manufacturing fertilizer) are poised to increase 5%. Meanwhile, Nutrien is focused on increasing free cash flow and “the return of meaningful capital to our shareholders. “

Based on 20 analyst inputs pulled by Nasdaq, NTR stock is a “strong buy”. Over the last three months, NTR shares are down -8.6%. The average NTR price target is $68.58 vs the current $48.72. The high estimate is $80, while the low forecast is above the current $48 per share.

Do you think wages will catch up with inflation costs? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities/assets discussed in the article.