3 attractive income stocks yielding as high as 8.7% — with inflation at 40-year highs, this trio can help strengthen your dwindling purchasing power
Inflation is on a white-hot tear.
U.S. consumer prices surged 7% in December from a year ago, marking the biggest jump since June 1982.
Whether central bankers believe inflation is short-lived, prices are on the rise right now.
To preserve purchasing power, investors usually turn to assets like gold and silver during inflationary times. But dividend stocks are another option.
If a company can provide a rising stream of dividends over time while appreciating in value, that can give you a hedge against inflation.
Of course, due to an extended bull market, most stocks don’t pay much these days. The average S&P 500 company yields just 1.3% at the moment.
But there are companies with much more generous payouts. Here’s a look at three dividend stocks with above-average yields reaching as high as 8.7%.
Bank of America (BAC)
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Let’s start with a bank stock. Why? While many sectors fear rising interest rates, banks look forward to them.
Central banks hike interest rates to tame inflation.
Banks lend money at higher rates than they borrow, pocketing the difference. When interest rates increase, the spread for how much a bank earns widens.
And it just so happens that quite a few banks, such as Bank of America, have upped their payouts to shareholders recently.
In July, Bank of America boosted its quarterly dividend 17% to 21 cents per share. That gives the company an annual yield of 1.7% at the current share price.
According to the latest earnings report, the bank earned a profit of $7.7 billion in Q3, up 58% from a year ago.
Even with a recent slide, Bank of America shares have climbed 45% over the past year. Its peers, such as Goldman Sachs, JPMorgan Chase and Morgan Stanley — all of which raised their dividend in 2021 — have also enjoyed substantial rallies during this period.
Southern Co. (SO)
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Moving up the yield ladder is Southern, a gas and electric utility holding company…