Federal Reserve Chair Jay Powell laid it out Wednesday, and Wall Street has expected it for some time. The tapering of quantitative easing was doubled, and two and perhaps three interest rate hikes are expected in 2022 and three in 2023. That sounds somewhat ominous, yet coming off a floor of zero to 0.25% interest rates, if all the rate hikes are 25 basis points, or one-quarter of 1%, we are still looking at a federal funds rate of 1.25% to 1.50% by 2023, which historically speaking remains very low.
The concern for many is that the current white-hot inflation becomes increasingly more painful next year, and with the stock market trading at the highest aggregate price-to-earnings ratio since the late 1990s dot-com bubble, we could be in for some very tough sledding in 2022.
Many across Wall Street feel that the place to be when inflation rears its ugly head is in commodities and real estate, so we screened our 24/7 Wall St. research database to look for Buy-rated stocks in those categories that also paid sizable and reliable dividends. We found six that look very attractive now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American gold producers. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold-mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden.
The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983. The stock was crushed as gold sold well off the January highs, and with an inflation surge you can bet many savvy portfolio managers are ready to add back top companies like this.
Shareholders receive a 2.87% dividend. The BofA Securities price target is $68.50, but the consensus target is up at $100.25. Agnico Eagle Mines stock closed Wednesday trading at $48.94 a share.
Enterprise Products Partners
This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides a wide variety of midstream energy services, including gathering, processing, transportation and storage of natural gas, natural gas liquids fractionation, import and export terminaling, and offshore production platform services.
One reason many analysts like the stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the master limited partnerships.
Enterprise Products Partners stock investors receive an 8.71% distribution. Goldman Sachs has a price target of $26. The consensus target is $28.38, and shares closed at $20.93 on Wednesday.