These 3 High-Dividend Stocks Offer Welcomed Inflation Protection
As investors struggle to succeed amid inflation, three high-dividend names from the materials sector might help.
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Investors are facing a difficult backdrop for stocks this year due to the impact of inflation. During this period, some materials stocks are interesting, thanks to the essential nature of their business.
Investors can also find high-dividend stocks from the basic materials sector. In this article, we will discuss the prospects of three top materials stocks, which all have dividend yields above 4%.
1. Dow Inc. (DOW)
Dow Inc. DOW is a standalone company that was spun off from its former parent, DowDuPont. That company has broken into three publicly-traded, standalone parts, with the former Materials Science business becoming the new Dow Inc. Dow began trading on its own in 2019, and should produce about $44 billion in revenue this year.
Dow posted third quarter earnings on October 24, 2024, and results were better than expected, albeit on lowered expectations. Adjusted earnings-per-share came to 47 cents, which was in line with expectations. Revenue was up 1.4% year-over-year to $10.88 billion, and beat estimates by $200 million.
Net sales were higher, led by the U.S. and Canada. Sequentially, sales were flat. Volume was up 1% compared to the year ago period, which was driven by gains in Performance Materials and Coatings.
Sequentially, volume was up 1%, which was led by Packaging and Specialty Plastics. Local price was flat year over year, as gains in Packaging and Specialty Plastics were offset by declines in Performance Materials and Coatings.
Dow returns significant cash to shareholders. Last quarter, returns to shareholders were $584 million, including $94 million in share repurchases and $490 million in dividends.
We see $2.10 in earnings-per-share for this year, but continue to expect 2025 and beyond to see materially higher earnings.
The company’s product portfolio is not only its competitive advantage, but also should perform well enough during downturns to keep the company profitable.
Dow’s focused efforts on high-growth areas such as consumer care, packaging and infrastructure, as well as its very long operating history as a component of its former company, are appealing for investors.
DOW stock currently yields 4.9%.
2. Amcor Plc (AMCR)
Amcor plc AMCR is one of the world's most prominent designers and manufacturers of packaging for food, pharmaceutical, medical and other consumer products. The company emphasizes making responsible packaging that is lightweight, recyclable and reusable. Amcor plc, which trades on the NYSE, was formed in June 2019 with the merger between two packaging companies, U.S.-based Bemis Co. Inc. and Australia-based Amcor Ltd.
Amcor reported its first quarter 2025 results on October 31. Quarterly revenue of $3.35 billion slightly missed analyst estimates by $100 million, while adjusted earnings-per-share of $0.16 was in line with estimates. Net sales declined 2% year over year, on a constant-currency basis. Adjusted earnings-per-share rose 5% on a comparable currency-basis from the same quarter last year.
Amcor is counting on its Bemis acquisition to drive strong growth over the next half decade. The main factors that will drive this growth acceleration are its global footprint opening up new attractive end markets and customers for the company’s products, and greater economies of scale driving efficiencies and higher margins.
Another growth catalyst for Amcor is the emerging markets such as China and Latin America, where economic growth is high and demand for packaging products is rising. The merger with Bemis brings the company significant growth prospects in developing markets.
Plus, with the merger into one gigantic manufacturing entity, Amcor has increased the ability to negotiate better costs from its suppliers. This should make Amcor an unstoppable force in the packaging industry. The company's balance sheet looks to be stable with a created rating of BBB. The company has a current debt-to-equity ratio of 1.9x.
With a projected dividend payout ratio of 69% for fiscal 2025, the dividend appears secure. The company raised its quarterly dividend by 2% on November 1. AMCR stock currently yields 5.0%.
3. LyondellBasell Industries (LYB)
LyondellBasell Industries LYB goes back to 1955, when its predecessor company began industrial-scale production of polyethylene in Germany. Today, LyondellBasell is one the largest plastics, chemicals and refining companies in the world.
The company provides materials and products that help advance solutions for food safety, water purity, fuel efficiency of vehicles, and functionality in electronics and appliances. LyondellBasell sells products in more than 100 countries and is the world’s largest producer of polymer compounds. LYB generated $41.1 billion in sales last year.
On May 24, 2024, LyondellBasell increased its dividend by 7.2% to a quarterly rate of $1.34.
On November 1, 2024, LyondellBasell released third-quarter results. For the quarter, revenues totaled $10.32 billion, which missed analyst estimates by $290 million. Adjusted earnings-per-share of $1.88 missed estimates by $0.08. Cash from operations totaled $670 million.
The positive factors were somewhat offset by challenges such as costs related to exiting the refining industry. These one-time items weighed down adjusted EPS by $0.13 per share for the quarter.
The impact of the elevated costs will subside, and over time LyondellBasell can drive earnings growth from a blend of organic growth and acquisitions. For example, the company paid $2.25 billion for the acquisition of A. Schulman, Inc in 2018, which doubled LyondellBasell’s compounding business.
It also gave the company exposure to new categories, such as consumer products, appliances and agriculture. In addition, the company recently launched a three-pillar strategy to create a more profitable and sustainable growth engine. Lastly, the share buyback program can boost bottom-line growth.
LyondellBasell’s primary competitive advantage is its leading industry position. It is the world's largest producer of polypropylene compounds and the largest licensor of polyolefin technologies. It also has a vast intellectual property portfolio, with over 5,500 patents.
LYB has increased its dividend for 13 consecutive years and currently yields 6.4%.
At the time of publication, Ciura had no positions in any securities mentioned.