Inflation is arguably the top economic story of the last couple of years. Indeed, consumer purchasing power is down 16% since the beginning of 2020. That means $1,500 would only buy $1,260 worth of goods today. But there is a way to be better off. Instead of purchasing consumer goods that rarely increase in value, consider taking that $1,500 and investing in terrific companies.
As shown below, a $1,500 investment in Vici Properties (VICI -0.28%), Amazon (AMZN 3.43%), or AbbVie (ABBV -4.58%) increased 51% to 110%, far outpacing inflation. Now, inflation is currently falling, which is good news. These companies are still terrific investments, and that is excellent news.
US Consumer Price Index: Purchasing Power Of the Consumer Dollar data by YCharts
Vici Properties
Vici Properties is the world's leading real estate investment trust (REIT) that holds experiential properties, like casino resorts. It owns some of the most recognizable properties, such as Caesars Palace, The Palazzo, The Venetian, and MGM Grand in Las Vegas, as well as other properties in 15 states. It has expanded to non-casino experiences like golf courses and lodges as well.
The best part is that, as the landlord, it isn't nearly as affected when casino revenue slips. Vici collected 100% of the rent even when the Las Vegas Strip was essentially closed during the pandemic. Vici even raised its dividend during this time. The dividend has risen every year since Vici's inception, actually.
The company intends to raise the dividend annually, and the financials support this goal. Just about 75% of adjusted funds from operations per share (the measure of a REIT's ability to support the dividend) was needed to support the current dividend over the last four quarters.
The dividend currently yields 5.3%, well ahead of inflation. It all adds up to a solid long-term investment.
Amazon
Amazon is one of the best investments of a generation, but it still has plenty of room to grow. Digital advertising, Amazon Web Services (AWS), and artificial intelligence (AI) are massive opportunities.
The e-commerce behemoth has come a long way from being a simple online retailer. The company now has logistics services that rival United Parcel Service in size, the leading cloud platform in AWS, and more than 200 million Prime subscribers. Here's what's next.
Advertising revenue took a hit across the economy in 2023 as companies prepped their budgets for a recession that never came. Nevertheless, Amazon's digital ad sales increased 26% year over year last quarter to $12 billion, $44 billion over the trailing 12 months.
Much of Amazon's ad sales are pay-per-click and product placement. Unlike television ads, these reach consumers who are already looking to buy. This is why sales increased despite a challenging economy. Ad sales now outpace sales for Prime subscriptions.
The next opportunity ties AWS and AI together. AWS acts much like a utility; customers pay for the data they use. Many companies cut their data budgets in 2023, so AWS growth slowed to just 13% through the third quarter to $67 billion. But growth could accelerate in a hurry. First, companies will probably loosen their data budgets since the recession did not happen. Then, the rise of generative AI will require tremendous data, driving AWS sales.
Amazon stock trades 18% off its 2021 high, and its price-to-sales and price-to-cash from operations per share ratios are well below pre-pandemic levels.
AMZN Price to CFO Per Share (TTM) data by YCharts
Meanwhile, the company is stronger today with the revenue streams above. This makes Amazon a terrific investment for the long haul.
AbbVie
AbbVie is another terrific dividend-growth stock that has raised its payout yearly since its 2013 debut. The company is most famous for the best-selling prescription drug of all time, Humira. It also has robust aesthetics (drugs like Botox and Juvederm), oncology (Imbruvica, Venclexta), and neuroscience (Vraylar, Quilipta) portfolios.
There are now biosimilar options on the market for Humira, so AbbVie expects to lose the majority of these sales, which peaked in 2022 at $21 billion or 36% of total sales. However, AbbVie has two blockbuster drugs on deck. Skyrizi and Rinvoq are forecast to achieve sales of $17.5 billion in 2025 and more than $21 billion by 2027. These drugs, plus increases in the other portfolios, should replace the Humira sales.
AbbVie also recently acquired ImmunoGen, bringing its drug Elahere to AbbVie. I recently wrote a detailed article about this acquisition. Suffice it to say that ImmunoGen brings a commercial drug with loads of potential, plus years of research and expertise, to the company.
Shares of the pharma giant currently yield nearly 4%, and shareholders can expect the dividend to rise annually, barring a severe unforeseen event. Pharmaceutical companies are also excellent stocks to own when the economic situation is cloudy since prescription drugs are generally necessary.
Investing available money is a great way to grow capital, beat inflation, and empower yourself in the future. You can confidently buy and hold the stocks above for the long haul.
