Inflation Is Rising: 3 Dividend Stocks to Buy Today

Canada’s inflation rate continues to climb, which should spur investors to buy dividend stocks like Empire Company Ltd. (TSX:EMP.A).

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

The heat is being turned up on Canadian consumers less than a week away from the September 20th federal election. Statistics Canada reported that the Consumer Price Index (CPI) rose to 4.1% in the month of August. This is significantly higher than the Bank of Canada’s 3% inflation cap target. Indeed, this is the highest inflation has spiked since March 2003. Today, I want to look at three dividend stocks that could provide protection for your portfolio in this environment. Let’s dive in.

Why grocery stocks are perfect to hold in this environment

Earlier this month, I’d looked at some of the best stocks to buy with inflation rising. Rising home and gas prices have been key drivers in the rise of CPI in 2021. However, food prices have also posted consistent gains that have put a strain on consumers. This is especially true in the meat and vegetables categories. Investors can look to offset these rising prices by owning grocery dividend stocks.

Empire Company (TSX:EMP.A) is still one of my favourites in this space. The company owns and operates top brands like Sobeys, Farm Boy, IGA, FreshCo, and others. Its shares have climbed 9.4% in 2021 as of close on September 15. However, the stock has dipped 6.1% month over month. Now is a great time to snatch this dividend stock on the dip.

In Q1 fiscal 2022, the company posted a marginal dip in earnings. However, this was primarily due to outsized numbers during the beginning of the pandemic last year. Shares of Empire possess a favourable price-to-earnings (P/E) ratio of 14. The stock offers a quarterly dividend of $0.15 per share, representing a modest 1.5% yield.

Dividend stocks in the oil and gas space are also a smart target

Oil and gas prices built serious momentum in the first half of 2021 on the back of resurgent demand. That eased up in the summer, but the sector is gaining steam again heading into the fall. Oil and gas price increases have been a big contributing factor in the inflation jump. Imperial Oil (TSX:IMO)(NYSE:IMO) is a Calgary-based integrated oil company. This dividend stock is up 45% in the year-to-date period.

The company delivered profit of $366 million in the second quarter of 2021. Meanwhile, its production surged to a 25-year high. Imperial Oil last paid out a quarterly dividend of $0.27 per share. That represents a 2.9% yield.

One more dividend stock I’d buy as inflation picks up

Dollar store retailers have attracted a broader pool of consumers over the past decade. Rising prices at their competitors should drive even more Canadians to Dollarama (TSX:DOL) locations. Moreover, the company will receive a boost as it will be able to sell non-essential items again. Shares of Dollarama have increased 6.7% in the year-to-date period.

In Q1 fiscal 2022, Dollarama delivered sales growth of 1.6% to $1.02 billion. This was a solid performance in the face of very challenging conditions. Dollarama has a solid P/E ratio of 29.  It offers a quarterly dividend of $0.05 per share. This represents a 0.3% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Retirement plan
Dividend Stocks

Planning for Retirement? Here Are the Best Canadian Dividend Stocks to Buy

Buying two of the best Canadian dividend stocks now for the long term can help you retire without financial worries.

Read more »

investment research
Dividend Stocks

A Dividend Giant I’d Buy Over TD Bank Stock

Energy and financials are the TSX’s sector heavyweights, but I’d choose a dividend giant in the former over a big…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

2 Dividend Stocks Worth a Permanent Spot in My TFSA

Restaurant Brands International (TSX:QSR) and Berkshire Hathaway (NYSE:BRK.B) are two of my top TFSA holdings that I intend to hold…

Read more »

Increasing yield
Dividend Stocks

3 Canadian Dividend Stocks Offering High Yields and Reliable Income

These valuable dividend stocks offer solid deals right now, with ultra-high yields that will certainly last well beyond this downturn.

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »