A number of factors like easy monetary policy, supply chain issues, and labor shortages drove the annualized inflation rate to 7% in December. Even though the Federal Reserve has promised interest rate hikes this year to curb inflation, the problem almost certainly won't be fixed overnight.

The good news for investors is that there are plenty of quality dividend growth stocks that can help protect your purchasing power, regardless of how long it takes the Federal Reserve to get inflation under control.

Here are four dividend stocks to consider with durable competitive advantages and plenty of room to grow.

A businesswoman prepares financial reports.

Image source: Getty Images.

1. Hershey

The confectioner Hershey (HSY -0.17%) generates enough excess cash each quarter to offer investors a 1.8% dividend yield, which is moderately higher than the S&P 500's 1.4%. That strong cash generation is supported by strong sales of top brands like Kit Kat, Twizzlers, and several variations of its famous chocolate bars. Hershey's market-beating payout also appears positioned to keep growing by at least the high single digits annually for the foreseeable future.

The stock's payout ratio was quite manageable at just 47.4% last year. This should allow Hershey to continue paying out the dividend while also executing complementary acquisitions and funding product launches to keep growing the business.

And the global snacks market is expected to grow 6.7% annually from $493.4 billion in 2020 to $732.6 billion by 2026. So there is plenty of growth potential for the company. Hershey's leading portfolio of brands should allow for strong pricing power in this inflationary environment. Paired with its huge market, this explains why analysts are forecasting Hershey will generate 9% annual earnings growth over the next five years. 

And better yet, Hershey's stock is trading at a current-year price-to-earnings (P/E) ratio below 27. Given the stock's quality and growth potential, this is arguably a fair valuation to pay for shares.

2. American Tower

The cell tower real estate investment trust (REIT) American Tower (AMT -0.74%) pays a generous 2.3% dividend yield, supported by multiple factors. The company is the largest cell tower REIT in the world with approximately 219,000 communications sites across 25 countries.

American Tower's dividend payout ratio is 52%. This means the company has the capital necessary to meet the growing global demand for cell towers without sacrificing its dividend or the dividend's future growth.

Analysts anticipate that the global telecom towers market will grow at a compound annual rate of 14.5% from $39.5 billion in 2018 to $114.1 billion by 2026. And as the largest cell tower REIT, American Tower should be able to increase its adjusted funds from operations (AFFO) per share in the low double digits each year over the medium term. This would be consistent with the 13.7% annual AFFO per share improvement that was posted from 2010 to 2020.

At the current $246 share price, the stock has a price-to-AFFO of 25.5 based on the guidance for 2021. This is a rational price for American Tower given its prospects.

3. Union Pacific

The railroad operator Union Pacific (UNP 1.23%) pays out a dividend with a 1.9% yield. The payout ratio last year was 43.1%, leaving room for the dividend to keep growing rapidly.

Approximately 28% of U.S. freight is moved via railway, the second-most-common means of transport behind trucks. Union Pacific's 32,000 miles of track covering the western two-thirds of the U.S. make the company an indispensable part of the economy. 

As both domestic and global consumption increase, Union Pacific will play an important role in transporting goods. That's why analysts are predicting it will deliver 17% annual earnings growth in the next five years.

At $241 a share, Union Pacific stock is trading at a P/E ratio below 21. With its inflation-crushing potential, this is a reasonable valuation for shares of the stock.

4. Broadcom

The semiconductor manufacturer Broadcom (AVGO -1.09%) pays out a dividend each quarter with a 2.8% yield, higher than the previous three stocks. And the 51.4% payout ratio last year should allow for robust dividend growth in the years ahead.

Broadcom is set to benefit as a major player in the semiconductor industry, which will become even more important to the global economy. It's estimated that the worldwide semiconductor market will grow at an annual rate of 8.6% from $452.2 billion last year to $803.2 billion by 2028. Because Broadcom is among the leaders of an industry with a promising future, analysts expect the company's earnings will increase 15% a year through the next five years. 

Even though Broadcom is one of the fastest-growing dividend payers, income investors can purchase shares at a P/E ratio of less than 18. This price appears more than sensible for the stock's healthy fundamentals.