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Top S&P Dividend Stocks To Invest In To Stay Ahead Of Inflation

Inflation rates have cooled to 3.7% from record 9% levels recorded last year, thanks to the Federal Reserve’s aggressive interest rate hikes over the past year. However, the median consumer price index still lies significantly above the Fed’s target 2% rate, implying further rate hikes down the road.

Given the precarious economic scenario, the Fed has temporarily paused rate hikes over the past couple of months, as the Federal Open Market Committee left rates unchanged since July of this year.

The volatile macroeconomic backdrop has kept prices sticky in several sectors, such as food and energy. Gas prices rose by 2.1% month-over-month in September and were a major driver behind inflation, according to the Bureau of Labor Statistics (BLS). As the crisis in the Middle East worsens, gas prices might continue to exert upward pressure on inflation levels in the near term.

Given this backdrop, investing in stable blue-chip dividend-paying stocks might mitigate the overall portfolio risk as well as provide supplemental income. Some of the top S&P 500 dividend-paying stocks follow.


With a market cap of nearly $20 billion, Walgreens Boots Alliance Inc. (NASDAQ:WBA) is one of the largest drugstore chains in the U.S. It accounts for nearly 20% of total prescription revenues in the U.S., as almost three-quarters of Americans reportedly live within five miles of a Walgreens store.

The company has an over 90-year dividend payout history, as it has distributed dividends to shareholders for 362 consecutive quarters.

An S&P 500 constituent, Walgreens has raised its dividend payments for 47 years in a row, making it one of the most popular dividend aristocrat stocks. The latest hike was announced last July when Walgreens raised its quarterly dividend payout by 0.5% year-over-year to 48 cents per share.

The retail drug store chain pays $1.92 per share annually, yielding 8.93% on the current share price. While WBA stock has been beaten down by market headwinds over the past year, analysts expect it to recover soon, making it an ideal undervalued stock. JP Morgan analyst Lisa Gill issued a price target of $30 on WBA stock, which reflects a price target of over 35%.

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Realty Income

Realty Income Corp. (NYSE:O) is one of the most popular real estate investment trusts (REITs) and is often termed the “monthly dividend company.” A constituent of the S&P 500 index as well as a member of the S&P 500 Dividend Aristocrats index, Realty Income currently owns or leases more than 13,100 real estate properties across the country.

To date, Realty Income has raised dividends for 122 consecutive years since its public listing on the New York Stock Exchange in 1994. In addition, through its 54-year operating history, the REIT has paid out monthly dividends 639 times in a row. The stock currently pays $3.072 in dividends annually, yielding over 6% of the current price.

“Core to Realty Income’s mission is providing our stockholders with dependable monthly dividends that increase over time. I’m pleased Realty Income will once again increase our monthly dividend for the 104th consecutive quarter,” Sumit Roy, President and CEO of Realty Income, said in a press release in September, adding, “With the payment of our 639th consecutive monthly dividend in October, we remain committed to this goal.”

Realty Income stock’s compound average annual total shareholder return stands at 14.2%, higher than the median returns delivered by its peers.

As the real estate market benefitted from the rising market prices, Realty Income’s total revenues rose by over 25% year-over-year to $1.02 billion in the fiscal second quarter ended June 2023. The total adjusted funds from operations amounted to $1 per share, up from 97 cents generated in the same period last year.

3M Company

With a 6.39% annual dividend yield, 3M Co. (NYSE:MMM) is an S&P 500 dividend aristocrat stock worth following. The company pays $1.50 in dividends annually, with its four-year average dividend yield standing at 4.16%.

3M has paid out dividends consecutively for 100 years and has returned approximately $828 million in dividends to shareholders in the second quarter of 2022. The company has also reported better-than-expected financials in the last quarter, with adjusted sales and EPS outpacing analyst estimates.

The company also settled its lawsuit against PFAS levels in its products earlier this year, rejuvenating investor optimism in the stock. Over the past three months, MMM has surged by nearly 6.2%.

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