Inflation Still Highest in 40 Years: 7 Hot Stocks That Yield Up to 13% Help Investors Fight Back

Rio Tinto

This mining giant could be a huge winner going forward, as demand for all commodities continues to storm higher. Rio Tinto PLC (NYSE: RIO) engages in exploring, mining and processing mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore and lithium. It also owns and operates open pit and underground mines, mills, refineries, smelters, power stations and research and service facilities.

The company recently completed the sale of a royalty it holds on an area including the Cortez mine operational area and the Fourmile development project in Nevada to RG Royalties, a subsidiary of Royal Gold, for $525 million in cash. Rio Tinto obtained the royalty as partial consideration for the sale of its 40% interest in the Cortez Complex to Barrick in 2008.

Rio Tinto stock comes with an 11.36% dividend. At $85, the BofA Securities target price signals plenty of upside from Monday’s close at $58.51. The consensus target is $75.64.

Two Harbors Investment

This off-the-radar small-cap company could provide the biggest total return capability to investors now. Two Harbors Investment Corp. (NYSE: TWO) operates as a REIT that focuses on investing in, financing and managing residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights and other financial assets in the United States.

The company’s target assets include agency RMBS collateralized by fixed-rate mortgage loans, adjustable-rate mortgage loans and hybrid adjustable-rate mortgages and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions.

Last week, Two Harbors announced that its subsidiary Matrix Financial Services has entered into a definitive stock purchase agreement to acquire RoundPoint Mortgage Servicing from Freedom Mortgage. Matrix has agreed to engage RoundPoint as a subservicer prior to the closing date and expects to begin transferring loans to RoundPoint in the fourth quarter of 2022. The parties expect to close the transaction in 2023, subject to the satisfaction of customary closing conditions and the receipt of required regulatory and government-sponsored entity approvals.

Investors take home a 13.20% distribution. The JMP Securities target price of $5.50 may head higher soon. The $5.21 consensus target is a bit lower, and Monday’s closing print for Two Harbors Investment stock was $5.17.

These seven top companies pay gigantic dividends, and their stocks are solid ideas in an inflationary and rising interest rate environment. They may not be suitable for conservative income investors, but for those with a higher risk tolerance, these are outstanding total-return stocks that make sense in a very difficult investing and low interest rate environment.

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