The Bureau of Labor Statistics’ recently released a consumer price index (CPI) report that showed inflation had increased 7% from 2020, its largest jump since 1982. The dollar is losing buying power at a concerning rate, and that means investing and spending decisions are becoming more important.
Here are two stocks that could help you thrive through current inflation. Read on to see why Procter & Gamble (NYSE:PG) and JPMorgan Chase (NYSE:JPM) are the top buys right now.
The gift that will keep on giving
If you were to look at stock chart of Procter & Gamble you would not think that the S&P 500 is down more than 7% so far in 2022 and the Nasdaq is currently in correction territory. That is because good ol’ P&G has hit its new intraday all-time high and is on the shortlist of S&P 500 companies that are up so far this year.
P&G announced impressive results from second-quarter fiscal year 2022 on Wednesday, including record-high quarterly income and strong year-over-year earnings growth.
The company’s fiscal year ends on June 30, 2022, and it just increased its full-year sales and free cash flow guidance. What’s more, P&G predicts it will return over $8 billion to shareholders through dividend payments and $9 billion to $10 billion by rebuying its own stock.
P&G’s guidance and results show it has the ability to generate organic growth and increase prices to offset higher costs and inflation. It has also revealed that demand for P&G’s products is strong regardless of the market cycle.
As an industry-leading recession-resilient company, P&G is a quintessential value stock that is ideal for retirees that want to safeguard their supplement income and investment principal in retirement, as well as traders of all ages who are looking to earn a passive income. With a dividend yield of 2.1% and 65 consecutive years of dividend increases, P&G is the Dividend King that you can count on to put up numbers in the good times and the bad.
A double-barreled solution
The usual businesses will obviously benefit from higher inflation. Those are food companies, energy companies and other commodity companies. There is another winner that goes unnoticed often in inflationary environments, though. Generally, that is the financial sector, and banks in particular. While all lenders ultimately borrow the cash they are lending out, the profitability of those loans actually grows as rates increase. And rates are definitely going up. The current average rate for a 30-year fixed mortgage is just below 3.7%, up from under 3.2% as of mid-Dec. The Mortgage Bankers Association expects this popular 30-year loan will end up costing 4% by the end of 2022.
JPMorgan Chase is the top pick to plug into this dynamic.
It is not just a conventional bank, obviously. But over 40% of 2021’s revenue of $121 billion was interest-based revenue after it had paid interest on dollars it borrowed. Even if it had a loan that was slightly more profitable, it might make a huge positive impact.
Now couple that with the fact that JPMorgan Chase’s recent dividend yield is a juicy 2.7%, and what you have got is a solid name for a market environment that has not been kind to these sorts of stock picks in a while.
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