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3 attractive dividend stocks for fat income and inflation protection — one even yields a mouth-watering 11.5%

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3 attractive dividend stocks for fat income and inflation protection — one even yields a mouth-watering 11.5%
3 attractive dividend stocks for fat income and inflation protection — one even yields a mouth-watering 11.5%

Inflation is still hot at 8.3%. The Fed has been raising rates to combat that.

But with most savings accounts still paying less than 0.7% annually, things remain challenging for investors looking to earn a passive income.

The good news? Even in the current interest rate environment, you can find companies paying generous dividends to investors.

Rock-solid dividend stocks can help investors diversify their growth-oriented portfolios. At the same time, they offer a reliable income stream so investors don’t have to time the market to make money in stocks.

To be sure, a high yield can be a sign that the company's financials and dividend are in jeopardy. But the risk/reward tradeoff might be worth it.

Here’s a look at three dividend stocks that could be an opportunity for income investors for the rest of 2022.

Walmart (WMT)

At a time when many brick-and-mortar retailers remain in the doldrums, powerhouse Walmart stands out.

The company runs a massive retail business with approximately 10,500 stores under 46 banners in 24 countries. Thanks to its “Everyday Low Prices,” Walmart attracts around 230 million customers to its stores and websites every week.

Walmart has thrived during the COVID-19 pandemic.

In the three months ended Apr. 30, 2022, revenue grew 2.4% year over year to $141.6 billion. Notably, comparable-store sales — a key measure of a retailer’s health — at Walmart U.S. rose 3.0%.

The company has also capitalized on the e-commerce boom, which is often considered a threat to physical retailers. Compared to two years ago, Walmart U.S. e-commerce sales grew 38%.

The retail giant started paying dividends in 1974 and has increased its payout every year since.

With a quarterly dividend rate of 56 cents per share, Walmart offers an annual yield of 1.8%.

Verizon (VZ)

When you make payments to a company every month, wouldn’t it be nice to get some cash back from it?

Well, investors can do that with Verizon — one of the largest telecommunication companies in the U.S. that also happens to be paying generous and reliable dividends.

Millions and millions of people pay Verizon every month to use the company’s service. Its 4G LTE network covers 99% of the American population, and more than 230 million people are already covered by its 5G network.

Verizon has been raising its payout annually and currently offers an annual dividend yield of 5% — a very generous amount in today’s market.

Business is growing, too. The company’s wireless activations increased 11% year over year in Q1 of 2022. Total wireless service revenue came in at $18.3 billion, up 9.5% from the year-ago period.

Despite Verizon’s solid business and rising dividend payouts, its shares have slipped around 10% over the past 12 months. With most of the market looking expensive by historical standards, Verizon could give contrarian investors something to think about.

Ellington Financial (EFC)

If Verizon’s 5% yield still isn’t juicy enough for you, check out Ellington Financial.

Headquartered in Old Greenwich, Conn., Ellington Financial has a portfolio of financial assets that provide it with a predictable income stream. It then passes those profits to shareholders through monthly dividends.

The company’s investments include residential and commercial mortgage loans, mortgage-backed securities and consumers loans among others.

While Ellington isn’t a widely followed financial play, it stands out in today’s market due to the sheer size of its payout. With a monthly dividend rate of 15 cents per share and a current stock price of $15.60, the company offers a staggering annual yield of 11.5%.

In Q1, Ellington Financial generated core earnings of $23.2 million, or 40 cents per share. Its book value per share at the end of December was $17.74.

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