Inflation is going nowhere anytime soon, and companies are bracing for it. According to the National Federation of Independent Business, in April about 72% of small business owners indicated that they were raising selling prices. That was the highest reading ever for the survey.
One way to combat inflation is to generate more income. And if you have money you can afford to invest, then dividend stocks can help you do just that. Both Healthpeak Properties (PEAK +2.24%) and Kimberly-Clark (KMB +0.58%) offer above-average dividend yields that can improve your financial position.
Image source: Getty Images.
1. Healthpeak Properties
Healthpeak's 3.9% dividend yield is attractive because it's both high and safe. The yield is more than double the S&P 500's average yield of 1.4%. And the company's fundamentals also look sound.
NYSE: PEAK
Key Data Points
The real estate investment trust (REIT) posted its most recent quarterly results this month, and they were solid. Revenue totaled $498.4 million for the first three months of 2022, up 9% year-over-year, and net income was $75.3 million, or a steady 15% of the top line.
But when it comes to real estate investment trusts (REITs) like Healthpeak, it's the fund from operations (FFO) number that you need to focus on. And at $0.45 per share, its FFO was comfortably above the $0.30 that the REIT pays out in dividends per share each quarter. For 2022, the company forecasts that its diluted FFO will be at least $1.70. That puts the REIT's payout ratio at 71%.
Although the stock has fallen 18% year-to-date, that's not a whole lot worse than the S&P 500's decline of 16% over the same time frame. At a reduced price, Healthpeak's yield only climbs higher. And with strong financials to support the dividend, this could be an excellent income investment to add to your portfolio today.
2. Kimberly-Clark
There is no shortage of reasons to like Kimberly-Clark as an investment. The company's brands are known around the world, and it estimates that close to one-quarter of the global population uses its products every day. Some of the big names consumers will be familiar with include Huggies, Cottonelle, and Scott.
NASDAQ: KMB
Key Data Points
Kimberly-Clark reported its first-quarter numbers last month, when it posted year-over-year sales growth of 7% and organic growth of 10%. Its strong brands allow the company to weather the storm that inflation has caused by enabling it to raise prices and still generate strong results. Although expenses were up during the period, the company's 10% decline in net income could have been much worse had Kimberly-Clark's gross profit not remained relatively steady -- it was down just 4% from the prior-year period.
But despite the declines, the dividend looks safe. The company's diluted per-share profit of $1.55 is still far higher than the $1.16 that Kimberly-Clark pays its shareholders every quarter. At that run rate, its payout ratio would be sustainable at 75%.
Year-to-date, Kimberly-Clark has been one of the better investments to own amid a struggling stock market. Down just 3% in 2022, it hasn't suffered large double-digit declines that many other stocks have. The company's ability to raise prices and pass on costs to consumers makes it an attractive, inflation-resistant stock.
And although its dividend of 3.4% is already high, investors will likely be collecting even more by simply buying and holding the stock. Earlier this year, the company became a Dividend King with the announcement of an increase to its payout for the 50th consecutive year -- and it's a good bet that this streak will continue.
