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Dividend Powerhouses: 7 Stocks to Outrun Inflation and Grow Your Wealth

I’m willing to bet every reader of this article is sick and tired of inflation, which, although falling, remains above 4%. It has hurt stock portfolios, the economy overall, and seems to exact its toll everywhere you go. The good news is dividend stocks to beat inflation offer one method by which investors can safely navigate through it. 

Dividends pay periodic cash that acts as a counterbalance to rising prices. In this case, all of the shares listed below include a dividend exceeding 4%. Therefore, they effectively erase the negative effects of inflation currently running at 4%. Further, the stocks listed below each represent equity in stable firms which are almost guaranteed to continue, one, continue paying dividends, and two, grow your investment. 

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Stocks to Beat Inflation: Physicians Realty Trust (DOC)

A photo of a young boy wearing sunglasses, jeans, a blazer, a white shirt and suspenders holding money in various denominations in one hand and sitting in a plush chair.
A photo of a young boy wearing sunglasses, jeans, a blazer, a white shirt and suspenders holding money in various denominations in one hand and sitting in a plush chair.

Source: Dmitry Lobanov/Shutterstock.com

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REIT stocks (real estate income trust) like Physicians Realty Trust (NYSE:DOC) consistently offer income to investors. They own and/or finance real estate which, in general, is an appreciating asset. Therefore, investors have come to expect returns over the long run. REITs are also required to pay at least 90% of taxable annual income back to investors in the form of dividends. Given those factors, the allure becomes clearer. 

But at the same time, the real estate sector is known for volatility and risks that can seemingly mount out of nowhere. In turn, what once seemed like a strong investment can quickly sour. But here’s the important point as it relates to Physicians Realty Trust: Investing in less-risky areas of real estate can shield investors. DOC stock is exactly that. Healthcare properties are more stable given the inelastic demand for healthcare in general. People spend on healthcare at a relatively constant pace even as the economy sours. 

In short, DOC shares fit that bill. It also pays a dividend yielding 6.67% that was last reduced in 2017

Stocks to Beat Inflation: Kinder Morgan (KMI)

stock market ticker screen with the word "dividends" appearing in large text.
stock market ticker screen with the word "dividends" appearing in large text.

Source: iQoncept/shutterstock.com

Kinder Morgan (NYSE:KMI) is a midstream/downstream oil firm. That means it owns and operates oil pipelines, storage facilities, and terminals that form the infrastructural backbone of the energy industry. That infrastructure spans the continental U.S. and offers relative stability due to the ongoing necessity of energy transportation. 

That isn’t to say that Kinder Morgan isn’t without risk. The company did reduce its dividend in 2016 after a period of excess leverage and equity issuance to fund expansion. It worked until it didn’t: slumping oil prices in 2015 caused a cascading effect that led to the dividend reduction. 

The company basically got the message and reduced debt, began self-funding, and in essence, smartened up. It currently offers a dividend yielding 6.57%. The relative recent reduction might cause investor fear but the company has instituted changes that make it less-risky overall. The dividend more than covers inflation at current levels, which again, goes a long way currently. 

Stocks to Beat Inflation: International Paper (IP)

A hand reaches out of a mailbox holding a wad of cash.
A hand reaches out of a mailbox holding a wad of cash.

Source: Shutterstock

International Paper (NYSE:IP) manufactures paper and packaging products. It’s the kind of stock in a ‘boring’ company that screams dividend overall, but more likely a low-yield dividend. That’s arguably why International Paper is so interesting. It is a stable firm and investors can leverage that stability to outpace inflation, and is another one of the top stocks to beat inflation.

IP stock includes a dividend yielding a 5.9% forward rate. The company reduced the dividend after spinning off its printing papers business in 2022. There’s positive news here as it relates to the dividend, though. Management argued that it would reduce the dividend in line with the decrease in printing papers business line revenues – 15-20%. The goal was to result in a payout ratio between 40-50%. 

It’s currently at 41%, on the low end. Therefore, it’s reasonable to anticipate that IP will slowly increase the dividend given it has plenty of room left to reach that 50% payout ratio. IP isn’t particularly interesting to talk about when discussing investments with friends but that doesn’t matter when it steadily pays income. 

Crown Castle (CCI) 

sheet of paper marked "dividends" with a $20 bill on top of it to represent dividend stocks
sheet of paper marked "dividends" with a $20 bill on top of it to represent dividend stocks

Source: Shutterstock

Crown Castle (NYSE:CCI) offers something that investors seem to be more and more interested in these days: A stock investment in infrastructure and income. The income side of that equation is obvious. Crown Castle pays a dividend yielding 5.52%. It is also a REIT, having become one in 2014. I won’t beat a dead horse here, you understand why it makes sense in the context of this article. 

The infrastructure it owns is in cell towers. Crown Castle operates more than 40,000 cell phone towers and 85,000 miles of fiber in the U.S. In general, the push toward 5G domestically offers a great opportunity for the firm and has put in into the spotlight. 

The dividend payout ratio is high but has come down drastically since 2017. Importantly, it did not reduce its dividend even as payouts soared then. In fact, it hasn’t reduced its dividend since it reorganized as a REIT back in 2014.

Phillip Morris (PM)

The word "dividend" highlighted in a dictionary.
The word "dividend" highlighted in a dictionary.

Source: Shutterstock

Phillip Morris (NYSE:PM) can certainly help investors grow their wealth. The tobacco stock offers what its competitors offer: A strong dividend that provides income for investment as the company pivots toward a new era. Cigarette smoking is out, or at least much less common than it used to be. Health campaigns hav ehad their intended effect. That has left tobacco titans like Phillip Morris pivoting toward a more modern suite of products. 

Those products go by differing names like smoke-free tobacco and reduced-harm products but it all points to one truth: Phillip Morris and others need to find products other than cigarettes through which to sell tobacco. That pivot toward novel tobacco revenue sources is an opportunity for investors. Dividends across the sector remain steadily high as an enticement for those willing to ride out the pivot. 

PM stock includes a dividend above 5%. And the transition is working with revenues growing by 3.5% in Q1 and smoke free revenues up by 14.5%(1). 

Ennis (EBF)

dividend stocks
dividend stocks

Source: Shutterstock

Ennis (NYSE:EBF) pioneered the business of business forms, labels, tags, folders, and envelopes over a century ago. A normal reaction to the company’s 4.9% dividend might naturally be that it’s an enticement for investment into a dying business. A sort of trap, of you will. 

Digital products have long been available and print businesses have been in decline for quite some time. Yet, Ennis has found a way to navigate the transition. It offers custom-specification products to its customers. Big deal, right? But the kicker here is that more thna 90% of its revenues is now attributable to that particular part of its business. Had it continued to do what it made it name in, it likely would have failed. 

It didn’t, and it’s now the better for having adapted. Revenues are growing and earnings are steady. It’s a simple company executing a strategy that has allowed it to adapt and pays investors nicely for believing in that narrative.  

Pinnacle West (PNW)

image of hands holding small money bag symbolizing dividend stocks
image of hands holding small money bag symbolizing dividend stocks

Source: Shutterstock

Pinnacle West (NYSE:PNW) is an Arizona-based utilities that poroduces and distributes electricity to over 25% of the state’s households. Its 4.2% yield is pretty much exactly in line with inflation, effectively mitigating its overall effects. 

PNW shares are oversold currently, at $81,  based on their target price of $78.40. So, it’s arguable that investors might wait for prices to fall below that threshold before establishing a stake. That’s fine but what’s also important to know here is that Pinnacle West is a regulated utility firm meaning its customer base and operating rights are essentially ensured. No other firms are going to but in on its territory because it is simply mandated that they cannot by law.  

The result is that Pinnacle West doesn’t truly face competition in the typical capitalist sense. It all means stable, predictable business and the ability to pay dividends with high, high predictability. If Pinnacle West isn’t the exact right utility by which to gain those benefits there are plenty of other such utility firms that offer a similar risk profile and business opportunity. 

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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