Bill Gates is using these dividend stocks to generate a large anti-inflationary income stream right now — you might want to do the same
With many pundits anticipating continued tough times for the stock market, it might be time to look at dividend stocks for 2023.
Dividend stocks are a way to diversify a portfolio that might be a little too obsessive about growth. They generate income in good times, bad times and, most importantly today, in times of high inflation. (U.S. consumer prices rose 7.7% year over year in October.)
They also tend to outperform the S&P 500 over the long term.
A prominent portfolio rich in dividend stocks is owned by the Bill & Melinda Gates Foundation Trust. With the trust used to pay for so many initiatives, revenue must continue to flow into it.
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Dividend stocks help with that.
Here are three dividend stocks that occupy a significant place in the foundation’s holdings.
Waste management (WM)
It’s not the most glamorous of industries, but waste management is an essential one.
No matter what happens to the economy, communities have no choice but to pay companies to get rid of our piles of trash, even as those costs increase.
As one of the biggest players in this space, Waste Management remains in an established position.
Shares have nearly doubled in the last five years. In the first nine months of 2022, operating income grew 11% year over year.
Waste Management’s dividend, which currently yields 1.6%, is up for 19 straight years.
The company paid nearly $1 billion in dividends last year, and its free cash flow of around $2.5 billion for 2021 means investors don’t have to worry about getting their checks.
The story goes on
caterpillar (CAT)
As a company whose fortunes normally follow those of the larger economy – which will happen when your equipment is permanently installed on construction sites around the world – Caterpillar is in an intriguing post-pandemic position.
The company’s revenue is feeling the effects of a paralyzed global supply chain, but President Joe Biden’s $1.2 trillion infrastructure bill means there could be a great deal to be built in the US in the near future.
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Caterpillar’s mining and energy business also offers exposure to commodities, which tend to do well during periods of high inflation.
The company’s shares are up more than 60% over the past five years on higher commodity and oil prices.
After announcing an 8% increase in June, Caterpillar’s quarterly dividend currently stands at $1.20 per share and offers a 2.0% yield. The company has increased its annual dividend for 28 straight years.
Walmart (WMT)
Because grocery stores are considered essential businesses, Walmart has been able to keep its more than 4,700 U.S. stores open during the pandemic.
Not only has the company increased both profits and market share since COVID spread around the world, but its reputation as a low-cost port makes Walmart the retailer of choice for many consumers when prices rise.
Walmart has steadily increased its dividends for the past 49 years. Its annual payout is currently $2.24 per share, which translates to a 1.5% dividend yield.
Walmart is currently trading at $153 per share, down from its 52-week high of $160.77 set in April.
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This article is informational only and should not be construed as advice. It is provided without any guarantee.