Investors need to find suitable investments now that inflation is hitting a four-decade high, so these 3 inflation-resistant stocks are great investments.
While it may be comforting to park your money in a bank account, inflation will gradually reduce its value. Recently, inflation has been in the news as it reached a four-decade high of 8.3% in April. To combat this, the Fed increased interest rates by half a percentage point, the largest single increase since 1992.
However, there is a way to overcome inflation. That way is to invest in equities that can successfully raise their prices over time. Such firms typically have strong brands and competitive moats, are household names, and are well-loved by customers, allowing them to increase costs without losing a significant amount of business.
Here are 3 inflation-resistant stocks that you might consider adding to your portfolio.
3M (NYSE:MMM) is, without a doubt, one of the most successful and cutting-edge industrial conglomerates in the market. The firm recorded $35.4 billion in sales in 2021, with a diverse business covering everything from adhesives and ceramics to wound care goods and stationery. The company’s varied portfolio protects it from economic downturns like recessions while also providing opportunity through its various operations.
3M’s net sales grew 9.9% annually to $35.3 billion in 2021. Furthermore, with earnings increasing 8.7% year over year to $5.9 billion, they demonstrate the firm’s resiliency during the pandemic. 3M also has a strong track record of paying more enormous dividends, chipping away at 64 years of increases and keeping it on the list of dividend kings. It also invests around 5% to 6% of revenues in research and development. Thus, assuring that it continues to offer cutting-edge solutions for its clients.
3M’s focus on growth above the markets it serves, and capital recycling should continue. In March, the firm sold its floor products business in Western Europe as part of its portfolio management strategy. In April, it acquired LeanTec, a digital inventory management solution provider for the automotive aftermarket sector. Together with 3M’s strong track record of success and cutting-edge technologies, these steps promise to keep the company flourishing for some time.
Procter & Gamble
Look no farther than Procter & Gamble (NYSE:PG) if you’re searching for a stock with a long track record and numerous financial cycles. The firm has been in operation for over 180 years. Moreover, they offer a diversified consumer goods portfolio of ten categories, selling to over 180 countries. With well-known brands like Pantene, Olay, Oral-B, and Pampers on its roster, the company boasts tremendous pricing power that can help it stay ahead of inflation.
For the fiscal year 2021, which ended June 30, net sales increased 7% over the previous year while net income grew 10% to $14.3 billion. Despite the impact of inflation, the company’s momentum has carried over to the first nine months of fiscal 2022, where net sales rose 6.1%, and net income inched up 2.5%.
Procter & Gamble also raised its quarterly dividend to $0.9133 a share, extending its 66-year streak of dividend increases. The firm’s forecast for fiscal 2022 sales growth of 4% to 5%. Furthermore, its net income growth of 6% to 9% demonstrates its capacity to keep growing even as cost pressures mount.
McDonald’s (NYSE:MCD), one of the most popular fast-food chains, has 38,000 outlets worldwide. Even as the pandemic swept across the globe in 2021, the firm remained strong. They posted a 21% year-over-year rise in overall revenue to $23.2 billion and a 59% boost in net income to $7.5 billion. Its iconic “Golden Arches” and focus on families have kept demand high for the long term, ensuring that this trend will continue over time.
The performance of the first quarter of fiscal 2022 has continued into the current year. McDonald’s reports t ear, and net income (excluding exceptional and one-off occurrences) rose by 19%. The firm has also announced a quarterly dividend of $1.38 per share. That is up 7% from the previous year and an increase in its dividend for 45 years.
Despite this, McDonald’s is not sitting on its laurels. On the contrary, it is expanding its network by collaborating with food delivery services. In May, McDonald’s and Deliveroo announced a new long-term relationship. This will see the two firms collaborate to extend the fast-food chain’s reach even more.