These high-yield stocks will help conservative investors combat inflation
Inflation has definitely penetrated the U.S., as the June
U.S. producer price index jumped 7.3% year-over-year and 1% month-over-month.
The YOY surge was the highest on record. Investors looking for a conservative
way to combat the inflation, which will probably stay elevated for at least the
next year, should consider safe, high-yield stocks.
Certainly, a portion of the YOY increase was caused by the
fact that some of the economy was closed in June 2020. Yet that’s far from the
only reason for the inflation that’s gripped the economy, as the 1%
month-over-month surge demonstrates.
In compiling this list, I used two strategies to find safe
high-yield stocks.
First, I chose large, highly reputable companies that
operate in sectors that are at least somewhat resilient to economic turbulence,
including elevated inflation.
Second, only firms whose 2021 earnings per share are
expected-(based on analysts’ average EPS estimates ) to be at least 1.7 times
the annual dividend per share that they will pay out this year were selected.
Companies that meet these two criteria are unlikely to cut their dividends, and
their stock prices are unlikely to fall dramatically.
Some say that high-yield stocks involve any equity with a
yield that’s above that of the 10-year Treasury note. But given the depressed
state of Treasury yields and the strength of inflation, I decided to use a
different definition of “high-yield stocks.”
Specifically, I picked stocks with yields of at least 2%,
about 50% above the average yield of the S&P equities. However, two of the
four names on my list have yields that are well above 2%.
These are the high-yield stocks that I chose: Continue reading …
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