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Canada’s inflation rate took another step higher last month. The consumer price index (CPI), rose 8.1% in June. That’s the highest rating since 1983. Investors and consumers are having difficulty coping with the inflationary wave. You will need to earn an additional 8% in income, dividends, and capital gains at this rate. Just to keep purchasing power.
Most stocks and savings accounts offer lower returns. However, there are high-yield dividend stock that offer greater returns than the inflation rate. These are the top three income providers that beat inflation.
Dividend stock #1
Slate Grocery REIT The ultimate inflation- and recession-resistant dividend stock (TSX.SGR.U). That’s because the company manages real estate for grocery stores across the U.S. — a resilient business model. Slate’s stock price is backed by the value of its hard assets while the dividend yield is 7.9% right now — roughly in line with the inflation rate.
Even brighter is the future. Slate’s assets are expected to retain their valuation because grocery stores are immune to the economic cycle. The company could increase rents to its tenants and the dividend yield could grow. In the meantime, inflation should decrease as fuel prices plummet and food supply issues are addressed.
Slate Grocery is a way for investors to beat inflation and create wealth long-term.
Dividend stock #2
Fiera Capital Another inflation-beating dividend stock is (TSX:FSZ). Private equity firm offering a 9% dividend yield. This makes it one the most attractive income stocks.
The above-average dividend yield does come with additional risks. Fiera manages $174.5 trillion that are used for real estate, commodity, debt, and infrastructure transactions. Tight liquidity and rising interest rates could impact the value of these assets. Fiera may struggle to retain capital in the event of a market downturn and investors becoming spooked.
Put simply, Fiera’s business model is at higher risk than a typical dividend stock. I believe that the 9% dividend payout adequately compensates investors to this risk. Fiera could also be a great investment for those who are patient investors, especially if asset prices rise in 2023.
If you’re a contrarian seeking inflation-beating returns, Fiera should certainly be on your watch list.
Dividend stock #3
Alaris Equity Partners Income Trust The final dividend stock on this list is (TSX.AD.UN). Its yield of 8% is close to the current inflation rate. But, the company may face some challenges in the future.
Alaris provides growth equity financing to small and mid-sized private companies and earns its income through dividends on preferred stock. This model is most effective in a rapidly growing economy with low interest rates. However, the dynamic has changed so it will have an uncertain impact on Alaris.
The stock trades at five times earnings per shares so even the worst case scenario may be priced in. Keep an eye on this stock if you’re trying to make a contrarian bet during this economic downturn.