Dividend stocks may be on the verge of a big comeback. After two consecutive years of inflation of over 6%, investors started getting some relief last year. The inflation rate finally fell last year. It currently sits at 3.35%; not a historic low, but not bad, either.
After what we’ve all been through, it’s completely understandable to be a little gun-shy about inflation. If you want to hedge your portfolio against another spike, one of the best ways to do that is with dividend stocks.
Inflation has a nasty habit of eroding your purchasing power. That means less to spend on food, gas, housing and incidentals. It’s also less to put into your portfolio. One reason I like dividend stocks is because the regular payouts help offset inflationary pressures.
So, as the cost-of-living increases, dividends give you a chance to keep pace with inflation and keep your purchasing power intact.
The Dividend Grader tool identifies dividend stocks that can help you in your quest to stave off the effects of inflation. By analyzing a stock’s payout history and dividend growth, you have a better chance of predicting which stocks are worth your time.
The best of the best get “A” ratings in the Dividend Grader, and that’s what we find on this list.
Arbor Realty Trust (ABR)
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Real estate investment trusts are among the best ways to earn regular income. That’s because REITs have special rules that require them to distribute 90% of their earnings to shareholders.
That brings us to Arbor Realty Trust (NYSE:ABR), which is involved with Fannie Mae and Freddie Mac loan programs, FHA and low-income loans, and bridge loans.
Net income in the third quarter was $77.9 million or 41 cents per share, compared to $62.7 million and 36 cents per share in the same quarter last year. Distributable earnings tallied $112.5 million versus $105.1 million a year ago.
ABR stock has been up and down in the last year and has shown a 16% loss in the last 12 months. It also has a dividend yield of 14%, which certainly eases the sting, which helps give ABR an “A” rating in the Portfolio Grader.
Alliance Resource Partners (ARLP)
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Alliance Resource Partners (NASDAQ:ARLP) is a small-cap stock that’s in the energy business. The company is one of the biggest coal producers in the eastern United States.
While coal may not have the same profile as a few years ago, coal still provides electricity for millions. Until the U.S. goes with completely green energy, coal will remain a player in the energy market.
As a master limited partnership, Alliance enjoys a tax structure that combines the tax benefits of private partnerships with the liquidity of publicly traded companies. That means investors get higher-than-average dividend payouts.
And last year was a good one for ARLP investors. Alliance reported record full-year revenues of $2.6 billion, including $625.4 million in the fourth quarter.
Alliance is expecting another record year in revenues in 2024. The stock is down 5% in the last year but still has a payout of 13.9%, giving it an “A” rating in the Dividend Grader.
Guess (GES)
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Guess (NYSE:GES) is a clothing and accessories manufacturer. While it makes men’s and children’s clothing, it’s best known for its products for women, including dresses, handbags, footwear, blouses and jeans.
It’s a challenging business, particularly when sales in the U.S. are down and the strong dollar makes Guess vulnerable to unfavorable currency rates when it does business internationally.
So why is Guess a top dividend stock? It enjoys a solid yield of 5.3%, and its payout ratio is only 37% which means it shouldn’t have any problem maintaining that payout.
Even with those challenges, Guess is showing some gains. Revenue in the third quarter was $651.1 million, up from $633.4 million in the same period a year ago. Profits were $291.1 million, up from $269.3 million. And its forecast for the fourth quarter shows continued increases in revenue of between 4% and 6%.
GES stock is flat for the last 12 months, but you’re buying this one for the dividend. It gets an “A” rating in the Dividend Grader.
HBT Financial (HBT)
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HBT Financial (NASDAQ:HBT) is an Illinois-based financial company. It operates Heartland Bank and Trust, a chain of bank locations in central and northeastern Illinois.
It’s a small company with a market capitalization of only $600 million. It also has a relatively low stock price, but HBT also does a good job of taking care of its shareholders.
Its dividend yield is currently at 4%, and it pays quarterly like clockwork. And the dividend has been increasing each year, giving investors some added security.
Net income in the fourth quarter was $18.4 million, or 58 cents per share, up from $13.1 million and 46 cents per share a year ago.
Small banks had a rough 2023 after the downfall of Silicon Valley Bank, Signature Bank and others. But HBT stock is up 14% since May and shows signs of going higher.
HBT stock gets an “A” rating in the Dividend Grader.
Tapestry (TPR)
A photo of a Coach retail store. Coach is one of the brands owned by Tapestry (TPR).
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Formerly known as Coach, Tapestry (NYSE:TPR) is a top-line clothing brand that includes the brands Coach, Kate Spade and Stuart Weitzman.
Together, the company has over 1,400 stores selling handbags and accessories, jewelry and footwear.
It is looking to grow substantially after agreeing last year to buy Capri Holdingsand its brands, which include Versace, Jimmy Choo, and Michael Kors.
That would create a fashion powerhouse operating in 75 countries worldwide, with combined global annual sales of more than $12 billion and more than $2 billion in profits annually. The deal should close this year.
But even without the deal, Tapestry is a solid company. Earnings for the company’s fiscal second quarter of 2024 included revenue of $2.1 billion, a new record, up 3% from a year ago. Operating profits were up 3% to $322 million and $1.39 per share. TPR stock is up 55% since November and offers a dividend yield of 3.2%. It gets an “A” in the Portfolio Grader.
Camden Property Trust (CPT)
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Camden Property Trust (NYSE:CPT) is a housing REIT primarily investing in apartment buildings. The Houston-based company has over 170 properties across the U.S. with 58,600 homes.
Rental income is a huge revenue stream as rents shot up across the U.S. in the last few years. The average rental in the U.S. is $1,700, and there are over 43 million rental properties.
One business challenge has been higher interest rates that cut directly into the company’s bottom line. But with interest rates expected to fall in 2024 by as much as a full percentage point, Camden is set up for additional profitability.
Revenue in the fourth quarter was $387.5 million, up 3% from a year ago. Income was $2.03 per share, up from 42 cents per share in the same period a year ago.
CPT stock is up 12% since November and provides a dividend yield of 4.4%. It gets an “A” rating in the Dividend Grader.
Lamar Advertising (LAMR)
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Lamar Advertising (NASDAQ:LAMR) is an advertising company that operates traditional billboards, digital billboards, transit displays on buses and airport signage. The idea is to get advertisers’ message to people on the go, quickly and clearly.
The company has over 361,000 outdoor displays across the U.S. and Canada, including over 4,600 digital billboards. That gives it a varied customer base that includes gaming companies, insurers, retailers, restaurants and health care companies.
Revenue in the third quarter was $542.6 million, up from $527.3 million a year ago. Earnings were down slightly, however, at $1.37 per share versus $1.44 per share.
LAMR stock is up 31% since October and provides a dividend yield of 4.7%. It gets an “A” rating in the Dividend Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
