5 Defensive Dividend Stocks to Buy Now for the Massive Surge of Inflation

Southern Company

This large-cap utility leader makes sense for very conservative investors. Southern Company (NYSE: SO) engages in the generation, transmission and distribution of electricity. It also constructs, acquires, owns and manages power generation assets, including renewable energy and battery energy storage projects and sells electricity in the wholesale market.

The company distributes natural gas in Illinois, Georgia, Virginia and Tennessee, as well as provides gas marketing services, wholesale gas services and gas pipeline investments operations. It constructs, operates, and maintains 75,924 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.6 million electric and gas utility customers.

Southern Company also owns or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear generating stations, 13 combined cycle/cogeneration stations, 44 solar facilities, 13 wind facilities, one fuel cell facility and one battery storage facility. It also provides products and services in the areas of energy efficiency and utility infrastructure. In addition, the company offers digital wireless communications and fiber optics services.

Shareholders receive a 4.22% dividend. BofA Securities has set a $69 price target for Southern Company stock. The consensus target is $66.86, and shares closed on Tuesday at $63.35.

VICI Properties

This is the top pick across Wall Street in the net lease group, and it is an ideal stock for investors who are more conservative. VICI Properties Inc. (NYSE: VICI) is a triple net lease REIT that was spun out of Caesars Entertainment post-bankruptcy.

The company has 23 mixed-use gaming, lodging and entertainment properties in its portfolio, and a subsidiary that owns four championship golf courses. VICI also owns roughly 34 acres of undeveloped land in Las Vegas, which it leases to Caesars.

Much of the focus this year was on VICI’s recent deal to acquire the real estate of the Venetian Resort in Las Vegas, with Apollo as a new tenant. Looking ahead, many on Wall Street are very positive on VICI’s embedded growth pipeline with Caesars Entertainment, including a put/call on the Centaur properties in Indiana (starting in January 2022) and a right of first refusal on a strip asset sale for Caesars, which could occur soon after a full earnings before interest, taxes, depreciation, amortization and restructuring or rent costs recovery.

VICI Properties stock investors receive a 4.87% distribution. The BofA Securities price target is $36. The consensus target is $33.42, and shares closed most recently at $29.24.

Another smart idea for conservative investors are Treasury inflation-protected securities (TIPS), which are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation in order to protect investors from a decline in the purchasing power of their money. As inflation rises, TIPS adjust in price to maintain their real value.

BlackRock has an exchange-traded fund called the IShares TIPS Bond ETF (NYSEARCA: TIP), which yields 3.61% currently and is a great way for investors to own the bonds without having to buy individual securities.

The bottom line is that inflation, whether transitory or not, appears to be here at least for now. It may be a good time to sell some profitable momentum or technology stocks and move the proceeds to these conservative ideas, some of which pay very large and dependable distributions and dividends.

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