Key Points

• The October producer price index edged up to 2.4%.
• Ongoing inflation could temper how many rate cuts are in line for 2025.
• Some stocks do better than others when inflation remains sticky.
• Is your portfolio set for the new Trump era? Contacting a qualified financial advisor should be a year-end goal. Click here to see how easy it is.

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).

While the recent inflation data is undoubtedly far better than the 9.1% increase printed in the summer of 2022, many Americans are still faced with the reality that prices for everyday necessities like food, energy, and other necessities remain very elevated. Inflation gradually reduces the buying power of consumer dollars. The best way to beat the current persistent inflation is to invest in businesses unaffected by rising prices.

Worried investors concerned over the sticky inflation need to look to high-yield dividend shares in the energy, health care, and consumer goods sectors for companies that will continue to outperform in an ongoing, albeit lower, inflation environment. We screened our 24/7 Wall St. inflation stock database and found four stocks with big, dependable, high-yield dividends that can continue to deliver regardless of price increases. All are rated Buy at top Wall Street firms we cover.

Why do we cover dividend stocks?

Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

CMS Energy

With a solid 3.05% dividend, this Michigan-based utility is a safe space for investors. CMS Energy Corp. (NYSE: CMS)  operates through three segments:

• Electric Utility
• Gas Utility
• Enterprises

The Electric Utility segment generates, purchases, transmits, distributes, and sells electricity. This segment generates electricity through:

• Coal
• Wind
• Gas
• Renewable energy
• Oil
• Nuclear sources

Its distribution system comprises:

• 208 miles of high-voltage distribution overhead lines
• 4 miles of high-voltage distribution underground lines
• 4,428 miles of high-voltage distribution overhead lines
• 19 miles of high-voltage distribution underground lines
• 82,474 miles of electric distribution overhead lines
• 9,395 miles of underground distribution lines
• 1,093 substations
• Three battery facilities

The Gas Utility segment purchases, transmits, stores, distributes, and sells natural gas. It includes 2,392 miles of transmission lines, 15 gas storage fields, 28,065 miles of distribution mains, and 8 compressor stations.

The Enterprises segment involves independent power production and marketing, including developing and operating renewable generation. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial, and diversified industrial customers.

Merck

This company remains a leading healthcare stock for conservative investors, paying a reliable 3.15% dividend. Merck & Co. Inc. (NYSE: MRK) operates through two segments: Pharmaceutical and Animal Health.

The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes under these product brand names:

• Keytruda
• Bridion
• Adempas
• Lagevrio
• Belsomra
• Simponi
• Januvia

Its vaccine products include preventive pediatric, adolescent, and adult vaccines under the Gardasil/Gardasil 9, ProQuad, M-M-R II, Varivax, RotaTeq, Live Oral, Vaxneuvance, Pneumovax 23, and Vaqta names.

The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, health management solutions and services, and digitally connected identification, traceability, and monitoring products.

The company serves:

• Drug wholesalers
• Retailers
• Hospitals, and government agencies
• Managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions
• Physicians, wholesalers, government entities, veterinarians, distributors, animal producers, farmers, and pet owners

Mondelez

This consumer sector giant makes good sense for conservative accounts and pays a 2.85% dividend. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide.

The company offers biscuits, including cookies, crackers, and salted snacks; chocolates, gums, and candies; powdered beverages and coffee; and cheese and grocery products.

Its primary brand portfolio includes:

• Oreo
• Ritz
• LU
• CLIF Bar
• Tate’s Bake Shop biscuits and baked snacks
• Cadbury Dairy Milk, Milka, and Toblerone chocolate

Mondelez sells its products to:

• Supermarket chains
• Wholesalers
• Supercenters
• Club stores
• Mass merchandisers
• Distributors
• Convenience stores
• Gasoline stations
• Drug stores
• Value stores
• Retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers, and other facilities, as well as independent sales offices and agents.

The company was formerly known as Kraft Foods and changed its name in October 2012.

PepsiCo

This top consumer staples stock posted earnings for the third quarter that were in line with expectations. It will continue to supply all the goods for the 2024 NFL football season tailgates and parties and pays a solid 3.30% dividend. PepsiCo Inc. (NYSE: PEP) is a worldwide food and beverage company.

Its Frito-Lay North America segment offers:

• Lays and Ruffles potato chips
• Doritos, Tostitos, and Santitas tortilla chips
• Cheetos cheese-flavored snacks, branded dips
• Fritos corn chips

The company’s Quaker Foods North America segment provides:

• Quaker Oatmeal
• Grits
• Rice cakes
• Natural granola and oat squares
• Pearl Milling mixes and syrups
• Quaker Chewy granola bars
• Cap’n Crunch cereal
• Life cereal
• Rice-A-Roni side dishes

PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:

• Pepsi
• Gatorade
• Mountain Dew
• Diet Pepsi
• Aquafina
• Diet Mountain Dew
• Tropicana Pure Premium
• Sierra Mist
• Mug brands

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