The top 9 equities to buy in 2022 and beyond to ward off inflation will be examined in this article. However, suppose you don’t want to read about which industries have historically demonstrated resistance to inflation. And how inflation is expected to develop in 2022. In that case, you can jump straight to the 9 Best Stocks to Protect Against Inflation in 2022 and Beyond.
Consumer Price Index for May 2022
The data for the May 2022 consumer price index was issued by the U.S. Bureau of Labor Statistics on June 10. The CPI rose 8.6% year over year for all urban consumers in May 2022. The highest 12-month gain since December 1981. In addition, the overall index, which excludes food and energy, rose 6.0% from one year to the next. The energy index saw its largest 12-month gain since September 2005, a 34.6% year-over-year increase. The food index rose 10.1% year over year, which was the highest annual gain since March 1981.
Interest rates are increased predominantly by the Federal Reserve.
And The Federal Reserve raised its interest rates by 75 basis points in June. In an effort to combat inflation, bringing the benchmark Federal Funds rate to a range of 1.5% to 1.75%. The Fed aims to increase rates once more in 2022. In order to combat inflation, which is currently at a 40-year high. This is the most considerable increase in interest rates since 1994.
What Kind of stocks Investments Should You Make?
In a study by Hartford Funds that examined inflationary periods from 1973 to 2021. It was found that 90% of the time when the average inflation rate was less than 3% and increasing, stocks outperformed inflation. However, equities returns declined as soon as inflation rose above the historical threshold of 3%.
Investors may find it challenging to choose where to put their money to protect against inflation. Mainly because of rising interest rates and growing inflation. However, certain industries have a history of demonstrating more inflation resistance, supporting investors through difficult times. These industries, according to the Hartford Funds research, were mostly energy, equity REITs, and metals and mining. According to Hartford Funds, the energy sector returned 9.0% annually on average. And during the predicted time period, outperforming inflation 71% of the time. Equity REITs produced an average annual return of 4.7% between 1973 and 2021, beating inflation 67% of the time. Finally, metals and mining companies grew an 8.0% median annual return while outpacing inflation 47% of the time.
Industries that Synovus believes may make effective inflation investments have been highlighted. The winning industries during inflationary eras were found by Synovus to be consumer goods, utilities, gold mining, and real estate. Professor of finance Derek Horstmeyer of George Mason University’s Business School conducted research to find equities with inflation-proof traits. Dr. Horstmeyer obtained data on the CPI over those years as well as the 50-year returns of public companies listed on U.S. exchanges. Between three time periods—March 1973 to May 1975, April 1978 to September 1980, and February 2021 to March 2022—he found a twofold rise in the inflation rate. Energy, which had median annualized returns of 18% between 1973 and 2022, and materials, which had a yearly median return of 16.81% between 1973 and 2022, were the two sectors that performed the best during inflationary periods, according to Dr. Horstmeyer.
One of the best equities to use as an inflation hedge is Newmont Corporation (NYSE: NEM), followed by Exxon Mobil Corporation (NYSE: XOM) and The Coca-Cola Company (NYSE: K.O.).
1. Company Exxon Mobil (ticker: XOM)
In March 2020, When covid was in an early stage when the price of crude oil went below $50 per barrel, many investors projected the end of the energy industry. Since then, they have been witnessing a sharp increase in the price of crude oil, which has fueled inflation. As a result, energy firms engaged in the production of oil and gas have seen significant improvements to their financial sheets, earnings, and cash flow. The U.S. oil company XOM is a fantastic mega-cap to possess. Over 63,000 people are employed by XOM, that was found in 1870, who prospects for oil and natural gas and produces products based on petroleum on six continents. The stocks had increased 46.5% year to date as of July 26.
3.9% was the dividend yield over the previous 12 months.
2.Corporation Chevron (CVX)
As one of the vital energy sector companies included in the Dow Jones Industrial Average, CVX has long been a blue-chip stocks.
The company currently runs segments for downstream chemical & petroleum manufacturing, goods, & transportation, in addition to global upstream oil & gas exploration. The company’s gas station brands, which include Chevron, Texaco, and Caltex, are the ones that retail investors are most familiar with.
Like XOM, CVX was founded in 1879 and has grown to employ over 42,000 people globally with operations all over the world. As of July 26, CVX had increased by 25.5% year to date.
3.The General Mills Corporation (GIS)
Products from General Mills include Yoplait yoghurt, Haagen-Dazs ice cream, Totino’s pizza rolls, Pillsbury dough, and Lucky Charms cereal. GIS started out as a small flour miller in 1928. Through the years expanded to become a common item in supermarkets and kitchen cabinets across the United States. Like many companies that sell consumer goods, GIS is able to maintain margins and profitability. Throughout recessions and inflation thanks to its capacity to pass costs forward to customers. Given the significance of its goods, consumer demand is anticipated to remain robust despite tightening household budgets. As a result, GIS has increased by 10.4% as of July 26, 2022.
4. The Kellogg Co. (K)
Are you familiar with Eggo waffles for breakfast, Pop-Tart pastries, and Rice Krispies cereal?Kellogg produces all of these products, and is one of the biggest and longest-running producers of cereal, snacks, and beverages in the United States. With a beta of 0.34, K has lower volatility than the industry average for consumer staples companies, meaning that it is only about one-third as volatile as the overall market. Substantial demand increase for K’s snack products in 2022 produced a stellar first-quarter results report with net profits up 15% from the prior year. A little decline in domestic revenue offset by a rise in international sales.
5. Realty Income Corporation (NYSE:O)
22 investors in hedge funds.
A retail REIT, Realty Income Corporation (NYSE:O), owns stakes in more than 11,200 commercial real estate properties across 70 different sectors. Over 1000 customers in the United States, Puerto Rico, the United Kingdom, and Spain have leases on the company’s retail properties. The company has 624 regular monthly payouts under its 53-year history, earning it the moniker “the monthly dividend company.” As of June 17, the company’s forward dividend yield was 4.62%.
Since the company is not subject to supply chain constraints and has a history of boosting its monthly dividends regardless of the global economic cycle, Realty Income Corporation (NYSE:O) is one of the companies to take into consideration investing in during inflationary periods. On June 14 2022, what happened was Realty Income Corporation (NYSE:O) did increase its monthly dividend from $0.247 to $0.2475 per share. This is the 116th dividend increase since the company went public in 1994. The shareholders of record on July 1, 2022 will receive the common stocks monthly dividend on July 15, 2022.
22 hedge funds revealed holding positions in Realty Income Corporation at the end of the first quarter of 2022. (NYSE:O). With 30 holdings, the value of these funds’ total stakes dropped from $398.85 million to $284.88 million.
As of March 31, Glendon Capital Management, with a $128.68 million holding, was the most bullish hedge fund in last centuray on Realty Income Corporation (NYSE:O).
Realty Income Corporation (NYSE:O) is among inflation-proof investment choice for individuals looking to hedge against inflation in 2022 and beyond.
6. Prologis (NYSE:PLD)
37 investors in hedge funds.
The global logistics real estate company Prologis, Inc. (NYSE:PLD) focuses on high-barrier, high-growth industries. On April 19, Prologis, Inc. (NYSE:PLD) released financial results for the fiscal first quarter of 2022. FFO was reported by the firm at $1.09, $0.02 over forecast. The company’s sales was $1.08 billion, up 5.40% from the previous year, although it fell $12.36 million short of expectations.
Another REIT to think about purchasing for inflation protection is Prologis, Inc. (NYSE:PLD), a market leader and reliable dividend payer. On May 5, the firm did announcement that its board of directors declared a quarterly cash dividend of $0.79 per share, which will be paid on June 30 to shareholders of record on June 16. And As of June 17, the stocks of the company has a future yield of 2.83%.
On June 13, Prologis, Inc. (NYSE:PLD) revealed that a merger deal with Duke Realty (NYSE:DRE) had been successfully finalised. Duke Realty (NYSE:DRE) will be acquired by Prologis, Inc. (NYSE:PLD) for $26 billion in all-stocks consideration. As a result of this deal, Prologis, Inc. (NYSE:PLD) will expand its presence in states such as Southern California, New Jersey, South Florida, Chicago, Dallas, and Atlanta, maintaining its leadership position in the industry. Also It is being anticipated that the merger will be finished by the fourth quarter of 2022.
While lowering his price objective for Prologis, Inc. (NYSE:PLD) from $184 to $160 on June 6, Wells Fargo analyst Blaine Heck kept the stocks Overweight rating, which is the equal of a Buy.
Hedge funds are accumulating more shares in Prologis, Inc. (NYSE: PLD). Prologis, Inc. had $546.54 million invested in it by 37 hedge funds at the end of the first quarter of 2022. (NYSE: PLD). In the previous quarter, 37 positions had stakes totaling $544.35 million.
With approximately 2.02 million shares in Prologis, Inc., AEW Capital Management was the organization’s largest shareholder as of March 31. (NYSE: PLD). The equivalent share is $326.89 million.
7.The Marathon Petroleum Company (NYSE: MRO)
There are 43 investors in hedge funds.
Marathon Oil Corporation (NYSE: MRO) is the stock that should be on investors’ radars in 2022, when inflation is at an all-time high, because oil and gas equities are rising and the energy sector has historically demonstrated to be inflation-proof. On May 4, 2022, Marathon Oil Corporation (NYSE: MRO) released its financial results for the first quarter of 2022. The business made $1.02 per share, above expectations by $0.04. Sales for the quarter were $1.75 billion, up 63.68% year over year, although they fell $80.43 million shy of expectations.
Two further differentiating features that make Marathon Oil Corporation (NYSE: MRO) an appealing investment option are the company’s low cost and dividend policy. The year-to-date gain for Marathon Oil Corporation (NYSE: MRO) is 86.42%, the forward P.E. ratio is 5.19, and the trailing twelve-month dividend yield is 1.01%.
Marathon Oil Corporation (NYSE: MRO) stock analyst Jeanine Wai increased her price objective for the company from $30 to $37 and kept her Overweight rating on the stocks. The analyst predicts a “high upside and tempting yield” notwithstanding secular difficulties.
Hedge funds favor Marathon Oil Corporation (NYSE: MRO). Forty-three hedge funds revealed holding positions in Marathon Oil Corporation at the end of the first quarter of 2022. (NYSE: MRO). The total value of these interests increased from $969.10 million with 40 positions in the previous quarter to $1.50 billion with all of them. Hedge funds are giving positive stock reviews.
In the first quarter of 2022, A leading stock Fisher Asset Management grew its holding in Marathon Oil Corporation (NYSE: MRO) by 2%, bringing it to $217.05 million. The biggest shareholder in the business is Fisher Asset Management.
Like Newmont Corporation (NYSE: NEM), Exxon Mobil Corporation (NYSE: XOM), and The Coca-Cola Company (NYSE: K.O.), Marathon Oil Corporation (NYSE: MRO) has maintained consumer demand and profit despite rising inflation.
8. Barrick Gold Corporation (NYSE: GOLD)
Forty-five investors in hedge funds.
Gold, and in particular gold equities, offer investors a sanctuary during periods of rising inflation. Although among the largest gold mining companies in the world, Barrick Gold Corporation (NYSE: GOLD), has strong financial standing and production data, making it one of the best stocks to invest in as an inflation hedge. Also The company holds gold mines in Argentina, Canada, Côte d’Ivoire, the Dominican Republic, Mali, Tanzania, and the United States.
On May 4, Barrick Gold Corporation (NYSE: GOLD) released financial results for the first quarter of the upcoming fiscal year 2022. The business reported revenue of $2.85 billion, down 3.48 percent from the prior year but up $105.78 million from forecasts. The business made $0.26 per share, $0.02 more than the industry average, due to decreased output from its Nevada Carlin and Cortez mines, Barrick Gold Corporation (NYSE: GOLD) reported 990,000 ounces of gold production in the first quarter, down 10.1% year over year from 1.1 million ounces. Nevertheless, Barrick Gold Corporation (NYSE: GOLD) reiterated its 4.2 million to 4.6 million ounces of gold production estimate for the fiscal year 2022.
In conjunction with the release of its earnings, Barrick Gold Corporation (NYSE: GOLD) doubled its quarterly cash dividend, increasing it from $0.10 to $0.20 per share. Investors who enrolled on May 27 will get the dividend on June 15. Therefore As of June 17, Barrick Gold Corporation (NYSE: GOLD) has year-to-date returns of 5.74% and a future yield of 2.0%
On April 21, Matthew Murphy, an analyst at Barclays, raised his price objective for Barrick Gold Corporation (NYSE: GOLD) from $26 to $28, keeping the stocks Overweight rating.
A total of 45 hedge funds owned $1.37 billion in Barrick Gold Corporation at the end of the first quarter of 2022. (NYSE: GOLD). In Q4 2021, 46 hedge funds had interests worth $958.53 million. Also First Eagle Investment Management is the largest shareholder in Barrick Gold Corporation, holding $653.26 million worth of shares as of March 31. (NYSE: GOLD).
9. Coca-Cola Company, No. 5 (K.O.)
Most people associate K.O. with the iconic red Coca-Cola cans that everyone is familiar with and enjoys. But K.O.’s product lineup doesn’t end there. K.O. not only distributes Coke but also popular soft drink brands like Sprite, Fanta, Minute Maid, and Glaceau Vitaminwater. K.O. has made significant gains into the European, South American, Middle Eastern, and Asian markets. This is despite the fact that people like its products particularly in the United States. Thus The company now employs 79,000 people, over 250 bottling facilities . And 900 manufacturing facilities, 27 million retail locations, and over 900 manufacturing facilities. K.O. has a lengthy history of paying dividends.
Note: This article is for knowledge purpose only. All the stocks are bearer at risk, please conduct your research and consult your financial planner before making any investments.
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Sukhpreet Kaur
