7 Inflation-Fighting Stocks to Buy to Build Income Streams

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Although information from the Dec. Consumer Price Index may seemingly bode well for costs-of-living dynamics, inflation-fighting stocks to buy is still a good idea. For one thing, it’s probably not wise to make wholesale strategy changes based on a month’s worth of data. Second, the money supply expanded dramatically, meaning much work needs to be done for containment. Therefore, investors shouldn’t give up on inflation-fighting stocks to buy.

Moving forward, it’s anyone’s guess what will happen this year. Indeed, with so many wild events erupting in the last three years, few experts will want to stick their neck out. That’s why dividend-paying companies enjoy significant relevance right now, including these inflation-fighting stocks.

CL
Colgate-Palmolive
$77.85
SRE
Sempra Energy
$160.83
PSX
Phillips 66
$103.03
IBM
IBM.
$145.89
PM
Philip Morris
$101.70
VZ
Verizon
$41.86
BHP
BHP Group

Colgate-Palmolive (CL)

Colgate toothpaste and mouthwash in a cup with a toothbrush

Source: monticello / Shutterstock.com

As a candidate for inflation-fighting stocks to buy, Colgate-Palmolive (NYSE:CL) makes sense. The personal care giant carries a forward yield of 2.41%, beating out the consumer staple sector’s average yield of 1.89%. While it’s not the most generous payout, the company also features 60 years of consecutive dividend increases.

Fundamentally, Colgate-Palmolive benefits from inelastic demand. Essentially, people should usually aim to brush their teeth three times a day, along with flossing at least once a day. More than likely, a recession won’t change this regimen. Should people skip a dental appointment or two, they’ll still be brushing their teeth.

According to analysts, CL rates as a consensus moderate buy. Among 12 experts, five of them rate CL a buy while the rest say hold. Nevertheless, generally rising exposure among hedge funds – even though the immediate sentiment may be negative – could be a good sign moving forward.

Sempra Energy (SRE)

The logo for Sempra (SRE) is seen at the top of an office building.

Source: Michael Vi / Shutterstock.com

If you’re looking for inflation-fighting stocks to buy, you probably can’t go wrong with public utilities. Undergirding the necessary services that modern societies need, these entities enjoy practically permanent demand. Specifically, Southern California’s Sempra Energy (NYSE:SRE) may be one of the best ideas for mitigating rising prices.

For one thing, Sempra features a forward yield of 2.85%. To be fair, it’s a bit lower than the utility sector’s average yield of 3.75%. However, the company enjoys 18 years of annual consecutive dividend increases. And while its payout ratio isn’t low, at almost 48%, it’s certainly not the highest ratio you’ll see. That’s good for sustainability.

Secondly, Sempra strongly benefits from geography. Namely, California represents the U.S. economy’s powerhouse, generating a $3.4 trillion GDP. Per the Los Angeles Times, the Golden State might also become the world’s fourth-largest economy. Whether you like it or not, Sempra is here to stay, making it one of the more compelling inflation-fighting stocks.

Phillips 66 (PSX)

Person holding the glowing world in their hands with icons with different types of energy. Energy stocks; energy storage

Source: PopTika / Shutterstock

While the above two enterprises enjoy reliable and dependable demand structures, we’re also talking about mitigating rising prices. In other words, inflation-fighting stocks to buy should feature more robust payouts. Fortunately, energy giant Phillips 66 (NYSE:PSX) helps deliver such passive income. At time of writing, the company carries a forward yield of 3.77%.

To be sure, critics might point out that this payout slips lower than the energy sector’s average yield of 4.24%. As well, the company only has two years of consecutive dividend increases. Still, Phillips 66 deserves consideration as one of the inflation-fighting stocks in part because of its payout ratio. At 31.23%, it’s a low and therefore credible metric.

Fundamentally, Phillips 66 should benefit from social normalization trends, particularly in the workplace. As major corporations put an end to remote work for all five business days of the week, commuting volume will rise. That should be very helpful for PSX, where the underlying firm specializes in the downstream (refining and marketing) component of the energy value chain.

IBM (IBM)

Photo of IBM (IBM) building as seen through the canopy of a tree. IBM logo is in large letters on side of building.

Source: shutterstock.com/LCV

Although IBM (NYSE:IBM) plies its trade in the exciting technology sector, Big Blue itself isn’t very interesting. For longer than it probably cares to admit, the company held onto legacy businesses that suffered from fading relevancies. Still, with key strategic shifts and acquisitions, IBM now represents a quiet outperformer. For instance, in the trailing year, shares gained almost 10% of equity value.

Regarding the topic of inflation-fighting stocks, IBM currently carries a forward yield of 4.52%. This metric ranks well above the technology sector’s average yield of 1.37%. Also, the company enjoys 29 years of consecutive dividend increases. While its payout ratio rings a little warm at 66.1%, it’s not the hottest stat ever.

Plus, IBM enjoys significant relevancies. Yes, we may be hurtling toward a global recession. But that’s not going to stop tech firms from innovating. Along with its artificial intelligence unit, IBM commands significant relevancies with its enterprise-level cybersecurity services. Therefore, Big Blue will probably make good as one of the inflation-fighting stocks to buy.

Philip Morris (PM)

packs of cigarettes in convenience store rack

Source: defotoberg / Shutterstock.com

With Philip Morris (NYSE:PM), this company represents an example of not shooting the messenger. Understandably, some folks may take issue with the company as it makes up the ranks of global big tobacco. At the same time, I write for a broad audience. Therefore, it’s not my right to presume the sensibilities of everyone. Even those who may have hesitancies with PM will find it difficult to ignore the passive income. Currently, Philip Morris features a forward yield of 5%. Again, the consumer staple sector’s average yield sits at 1.89%. As well, PM enjoys 14 years of dividend increases, a trend I’m sure management will want to sustain.

Regarding the fundamentals, globally, smoking prevalence declined, which doesn’t seem to support Philip Morris. However, many people still do enjoy their adult liberties and they’re choosing e-cigarettes or vaporizers. Philip Morris invested in this relatively new platform, making it an intriguing (though controversial) idea among inflation-fighting stocks.

Verizon (VZ)

Verizon store sign. VZ stock.

Source: Shutterstock

To be fully transparent, if you want a more conservative approach with your inflation-fighting stocks, you should consider some of the names above. With Verizon (NYSE:VZ), the narrative admittedly becomes incredibly tricky. For one thing, you’re looking at a rather steep market loss, shedding almost 22% in the trailing year.

From another angle, the company arguably deserves the fallout. In large part due to Verizon’s aggressive marketing initiatives in 2021, the volatility of the following year hurt VZ stock. As a result, Verizon encountered analyst criticism and pessimism.

Though distracting, it’s also fair to point out that investors hard hit with rising prices might give the telecom giant another look. That’s because Verizon offers a forward yield of 6.24%. Notably, the communication sector’s average yield sits at a comparatively low 2.62%. Moreover, Verizon enjoys 18 years of consecutive dividend increases. On a final note, the company currently enjoys a moderate buy consensus view. Therefore, if you want to take a shot, you won’t be the only one.

BHP (BHP)

Smartphone with BHP Group logo in front of BHP website. BHP stock.

Source: T. Schneider / Shutterstock

If you really want to take your inflation-fighting stocks to the next level, then you may want to consider metals and mining firm BHP (NYSE:BHP). For starters, the Australian stalwart represented one of the few winners of 2022. And in the trailing year, BHP gained nearly 17% of equity value. Indeed, near-term sentiment rates strongly, with shares soaring almost 41% in the past half-year period.

Fundamentally, geopolitical flashpoints crimped global supplies of critical resources. Therefore, western-friendly countries such as Australia will play a more vital role in international commerce. Specific to BHP, the company specializes in many critical resources, such as copper and nickel. Both feature heavily in advanced solutions such as electric vehicles.

Of course, probably the biggest reason why some investors may look to BHP as one of the inflation-fighting stocks to buy is the payout. Commanding a forward yield of 10.1%, stakeholders could be getting passive income superior to some stocks’ annual market returns. However, the downside is that the payout ratio stands at a stratospheric 127.2%. Still, because of increased fundamental relevance, BHP remains intriguing.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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