3 Dividend Stocks to Help You Beat Inflation

On the hunt for dividend stocks? Here are three stocks that could help you beat inflation!

| More on:
analyze data

Image source: Getty Images

Dividend stocks are great assets to hold, because they could supplement your primary source of income. By holding enough shares of excellent dividend companies, investors may even by able to replace their primary source of income, allowing them to live comfortably without having to rely on a job.

One aspect of dividend stocks that investors should keep in mind is a company’s ability to increase distributions over time. The best dividend stocks are able to raise distributions faster than the rate of inflation. By choosing companies that manage to beat the inflation rate on an annual basis, dividend investors won’t have to worry about losing buying power over time. Here are three dividend stocks that could help you beat inflation!

Start with this excellent dividend stock

For all the companies listed in this article, I’ll be assessing dividend growth over a five-year period. This gives investors an idea of how fast a company’s dividend has grown over a medium-term timeframe. The first dividend stock investors should consider buying today is Fortis (TSX:FTS)(NYSE:FTS). This company provides regulated gas and electric utilities to 3.4 million customers across Canada, the United States, and the Caribbean.

In 2017, Fortis offered investors a quarterly dividend of $0.40 per share. Its most recent dividend distribution was $0.535 per share. This represents a compound annual growth rate (CAGR) of about 6%. Although inflation has run rampant in 2021 and 2022, this 6% dividend-growth rate should be enough to keep investors ahead of inflation over the long run. Fortis is also well respected as a dividend company because of its amazing 47-year dividend-growth streak.

Choose one of the Canadian banks

The Canadian banks are also outstanding dividend payers. For example, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) first declared a dividend on July 1, 1833. Since then, it has never failed to distribute a dividend to shareholders. That means the company has been paying dividends for the past 189 years.

In 2017, Bank of Nova Scotia’s quarterly dividend was $0.76 per share. Currently, the company’s quarterly dividend is $1 per share. That represents a CAGR of about 5.6% over the past five years. Like Fortis, this outpaces the inflation rate by a healthy margin. Bank of Nova Scotia also offers investors a very attractive forward dividend yield of 4.31%.

This stock’s dividend growth is out of this world

goeasy (TSX:GSY) is perhaps the best dividend stock you aren’t aware of. This company is very polarizing because of its business model. It provides high-interest loans to subprime borrowers and sells furniture and other home goods on a rent-to-own basis. Because of the nature of its business, goeasy saw record revenues over the pandemic.

In 2017, goeasy’s quarterly dividend was $0.18 per share. Today, goeasy’s quarterly dividend has risen to $0.91 per share. That represents a staggering CAGR of 37% over the past five years, greatly outpacing the inflation rate. What’s even more impressive about goeasy is that the company has managed to maintain a very low dividend-payout ratio, despite its incredible growth rate. That suggests that goeasy could continue to comfortably increase its dividend over the coming years.

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 Jed Lloren owns BANK OF NOVA SCOTIA. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.

More on Dividend Stocks

Cogs turning against each other
Dividend Stocks

1 Passive-Income Stock to Counter Volatility

Looking for a stock that can counter volatility now and tomorrow? This stock is a reliable option for growth and…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

A Top REIT for High-Yielding Income

This top REIT on the TSX offers investors a considerable amount in shareholder dividends through its massive dividend yield.

Read more »

investment research
Dividend Stocks

Young Investors: Create Cash Flow With This Top Dividend Stock

If you're a young investor looking for cash flow, you need a strong dividend stock and solid banking program designed…

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 Superb Dividend Stocks I’m Ready to Buy

The market is full of great options for income-seeking investors. Here are three superb dividend stocks to buy now.

Read more »

Payday ringed on a calendar
Dividend Stocks

Gen Z Investors: Create a Stable Passive-Income Stream of $188/Month for Retirement

This passive-income stock is perfect for Gen Z investors who don't have much to invest but want to see stable,…

Read more »

exchange-traded funds
Dividend Stocks

2 ETF Bargains You Shouldn’t Miss in 2022

Index ETFs are only discounted when there is a market-wide slump, which is rarer than sector-specific dips, so you should…

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

2 Real Estate Stocks to Add Growth to Your Portfolio

The right real estate investments, whether they are properties or real estate stocks, usually offer a decent mix of income…

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

2 Canadian Energy Stocks With Ridiculously Fast-Growing Dividends

Canadian energy stocks are gushing cash and there's plenty left for shareholders. Here are two stocks for ridiculously fast-growing dividends

Read more »