3 Dividend Stocks to Battle Inflation

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Includes: COP, PG, TAP, TBT
by: Ryan Edward

While many investors are unsure of where the market is going from here, many of them agree wholeheartedly on one thing: inflation. With record-setting government debt and spending, combined with a possible resurgence of commodity prices, both consumers and investors face an inflationary dilemma.

Most investors, smelling high future inflation rates, have fled to the traditional assets that battle such an event. These include TIPS, Gold, and commodities in general (commodity ETF's).

Often, when a possible event is glaringly obvious to most investors, the traditional ways to battle that problem are usually overcrowded. Gold prices have record monthly highs, oil has had a strong resurgence despite still dwindling demand, and ETF's shorting Treasuries have had huge rallies as of late (NYSEARCA:TBT).

So with future inflation staring many investors square in the face, and the traditional ways of battling it not priced very attractively, an easy way to conquer this dilemma is to plunge into the still knocked-down prices of equities.

The following is a list of 3 stocks that should hold up well, or even benefit from a rising CPI:

ConocoPhillips (NYSE:COP):
Having its stock price tied more closely to the price of oil when compared to it's peers is a huge plus for Conoco. During periods of inflation and stagnant or rising oil prices, this leverage could make Conoco a winner. That combined with its juicy4.3% yield makes COP mightily attractive.

Molson Coors (NYSE:TAP):
With commodity prices down, Molson should see some relief in costs in coming quarters. This, combined with cost cutting measures provided by their recent combined sales efforts with SAB-Miller, should boost profits even more. It also falls into the 'Sin Stock' category, making it recession resistant. TAP currently yields 2.1% on common stock.

Proctor & Gamble (NYSE:PG): Trading at a reasonable 12x forward P/E, Proctor should be able to thrive if its smaller competitors are forced to deal with higher commodity costs again. Their brand name loyalty and recognition is some of the best in the world. Over 40% of its sales are international, giving investors a hedge against the US dollar. PG has 3.5% dividend yield, which was recently raised in April.

Disclosure: Author holds no positions mentioned.