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George Soros and Jim Rogers are among the legendary investors who are worried about inflation and bullish about the commodities. In an inflationary period, bonds and Treasury bills tend to have negative returns. Dividend stocks are the best option for yield seeking investors in the current monetary environment. Investing in high dividend stocks can beat long-term bonds over the next couple of years.

We handpicked 10 dividend stocks with at least 3% yield that should beat TLT’s total return over the next couple of years:

  1. Ituran Location and Control Ltd. (NASDAQ:ITRN): Ituran is a high tech company that mainly engages in the area of location-based services, including stolen vehicle recovery (SVR) and tracking services. The company also provides wireless communication. Those are the good guys that help you recover your car after it gets stolen. Last year the company paid $1.50 in dividends, which corresponds to a 9.6% dividend yield. Seth Klarman has a large ITRN investment.
  2. 1st Source Corporation (NASDAQ:SRCE): With a P/E ratio of 15 and a dividend yield of 3.5%, SRCE has soaring profits. The fourth quarter net income was $12.57 million, up 101.94% compared to the $6.22 million in the fourth quarter of 2009. The stock gained 24% over the past 12 months.
  3. Aberdeen Chile Fund, Inc. (NYSEMKT:CH): This is a closed-end equity fund which invests primarily in Chilean securities. Chile has vast amounts of mineral reserves. Therefore rising energy and raw material prices will be a huge bonus for this fund. Aberdeen Chile Fund has been increasing its dividend recently and it paid $0.49 per share in December. Chile Fund’s dividend yield is 9.9%, assuming it will keep the dividend constant.
  4. AT&T Inc. (NYSE:T): It is certain that AT&T will be facing tougher competition this year. Nevertheless, a P/E ratio of 8.5 and a dividend yield of 6% is pretty attractive for yield seekers.
  5. Great Northern Iron Ore Properties (NYSE:GNI): This trust owns interests in both mineral and non-mineral land in northeastern Minnesota. The company derives income from royalties on iron ore minerals (taconite) mined by its lessees from these properties. Considering the huge demand for iron ore by emerging markets, the company will surely benefit from the increase in iron ore prices. The current P/E is around 10. The company distributed $3.75 per share during the last two quarters, implying a dividend yield of nearly 15%.
  6. Mission West Properties, Inc. (NASDAQ:MSW): MSW is a real estate trust that operates in the Silicon Valley portion of the San Francisco Bay Area. With the collapse of the real estate sector in 2007, MSW plunged. Right now they're trading at around $7, which is less than half of its peak of $15. With an average dividend yield of 8%, a P/E ratio of 15 and Price to Book Value of 1, MSW offers us a good opportunity to participate in REITs.
  7. Navios Maritime Partners LP (NYSE:NMM): NNM is mainly engaged in sea transportation. The stock has a 8.7% dividend yield and a P/E ratio of 14.
  8. British Petroleum (NYSE:BP): Whitney Tilson is extremely bullish about BP. The stock suspended dividend payments after the Gulf oil spill but Tilson believes BP will resume paying dividends this year. Tilson thinks BP is too cheap, trading at 7.3 times 2011 estimates.
  9. Universal Insurance Holdings, Inc. (NYSE:UVE): Universal Insurance is a property insurance company with a 7% dividend yield and a 7.5 P/E ratio. UVE seems like a great value stock. There was a large insider purchase in mid December. The stock returned 11% since, outperforming the SPY by a large margin.
  10. World Wrestling Entertainment, Inc. (NYSE:WWE): As an integrated media and entertainment company, the WWE operates in many sectors. It has been paying a quarterly dividend of $0.36 per share since 2008. The stock’s current price is $12 and has a dividend yield of 12%.
Source: 10 High Dividend Stocks With Inflation Protection