2 Dividend Stocks That'll Protect Your Money From Sky-High Inflation Despite the Fed's aggressive rate hikes, inflation is nowhere near its target level. Moreover, experts believe it might be a while before inflation comes down from the levels seen this...
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Despite the Fed's aggressive rate hikes, inflation is nowhere near its target level. Moreover, experts believe it might be a while before inflation comes down from the levels seen this year. Hence, investing in reliable dividend-paying stocks Global Partners (GLP) and Westlake Chemical Partners (WLKP) might help hedge against sky-high inflation. Read more.
The core Consumer Price Index (CPI) rose 6.6% in the year through September, climbing to a 40-year high, while the broader headline CPI measure rose 8.2%. The Fed is widely expected to continue its aggressive rate hikes to tame sky-high inflation.
According to the Conference Board, the Consumer Confidence Index decreased more than expected in October as the high inflation and the Fed's aggressive stance on it continued to drag on Americans. Moreover, the Expectations Index is lingering below a reading of 80, which indicates rising recession risk.
Experts believe inflation is here to stay, and it will likely be a couple of years before prices really come down from the highs seen this year.
Therefore, investing in fundamentally solid and dividend-paying stocks Global Partners LP (GLP) and Westlake Chemical Partners LP (WLKP) could help protect your money from sky-high inflation.
Global Partners LP (GLP)
GLP purchases, sell, gathers, blends, stores, and manages the logistics of transporting gasoline and gasoline blend stocks, distillates, residual oil, renewable fuels, crude oil, and propane to wholesalers, retailers, and commercial customers in the New England states, Mid-Atlantic region and New York.
On October 25, GLP declared a quarterly cash distribution of $0.6250 per unit ($2.50 per unit on an annualized basis) on all of its outstanding common units, payable on November 14, 2022. Its annual dividend of $2.50 yields 8.48% on prevailing prices. The company's dividend payouts have increased at a 5.7% CAGR over the past three years and a 5% CAGR over the past five years.
GLP's sales increased 62.3% year-over-year to $5.32 billion for the second quarter ended June 30, 2022. Its gross profit grew 58.1% from the year-ago value to $281.48 million, while its operating income rose 466.2% year-over-year to $186.81 million.
The company's adjusted EBITDA increased 129.9% year-over-year to $134.91 million. Also, its net income and EPS increased 1,241.2% and 1,904.3% year-over-year to $162.81 million and $4.61.
Analysts expect GLP's EPS to increase 447.3% year-over-year to $7.17 in the current fiscal year ending December 2022., Its revenue is likely to rise 40.3% year-over-year to $18.58 billion. It surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 25.5% year-to-date to close the last trading session at $29.47. It has gained 2.5% over the past five days.
GLP's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and Momentum and a B for Sentiment. Within the A-rated MLPs – Oil & Gas industry, it is ranked #3 out of 33 stocks.
Click here to see the other ratings of GLP for Growth, Stability, and Quality.
Westlake Chemical Partners LP (WLKP)
WKLP acquires, develops, and operates ethylene production facilities and related assets in the United States. The company's ethylene production facilities primarily convert ethane into ethylene. It also sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen, directly to third parties on either a spot or contract basis.
On August 1, 2022, WLKP declared a quarterly distribution of $0.4714 per unit for the second quarter of 2022, payable on August 25, 2022. Its annual dividend of $1.89 yields 8.29% on prevailing prices. The company's dividend payouts have increased at a 2.4% CAGR over the past three years and a 6.1% CAGR over the past five years.
During the second fiscal quarter ending June 30, 2022, WLKP's total net sales increased 39.3% year-over-year to $448.79 million. Its net income amounted to $84.44 million, while its EBITDA came in at $118.48 million for the quarter.
The consensus EPS estimate of $0.47 for the fiscal third quarter ended September 2022 represents a 31.8% improvement year-over-year. The consensus revenue estimate of $366.48 million for the next year represents a 24.7% increase from the same period last year.
Over the past month, the stock has gained 14.1% to close its last trading session at $22.75.
WLKP's strong fundamentals are reflected in its POWR Ratings. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The stock also has an A grade for Quality and a B for Value and Sentiment. Within the A-rated MLPs – Other industry, it is ranked #1 of 10 stocks.
To see additional POWR Ratings for Value, Momentum, and Stability for WLKP, click here.
GLP shares were trading at $29.55 per share on Thursday morning, up $0.08 (+0.27%). Year-to-date, GLP has gained 34.35%, versus a -18.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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