The Top 3 Ways to Make Money with Higher Inflation

Higher inflation has been rough on us all

While there’s hope inflation will cool, we have to contend with consumer prices we haven’t seen in about 39 years.  According to the Labor Department, CPI jumped 6.8% in November, year over year.  That’s the fastest increase since June 1982, when inflation was up to 7.1%.

If we strip out food and energy, core-CPI jumped 4.9% in November, year over year.

According to Fox Business, “Price increases were widespread: Energy prices jumped 3.5% in November and are up 33.3% year over year. Gasoline is a stunning 58.1% higher than it was a year ago. Food prices have also climbed 6.1% higher over the year, while used car and truck prices – a major component of the inflation increase – are up 31%.”

Protect Your Portfolio from Inflationary Threats

Rising inflation has become a major concern for retirement age investors.

According to a new survey from Global Atlantic Financial Group, investors ages 59 to 75 are concerned that inflation will wreak havoc on their investments, as noted by CNBC.  About 71% of those surveyed believe it will negatively impact them.

“Moreover, 46% of investors said they believe rising inflation and low interest rates will make it more difficult to have steady income in retirement. Of those invested in fixed income, 46% said they are concerned about low interest rates affecting their retirement income,” added CNBC.

Thankfully, there are investment strategies that can help protect your portfolio.

Some of the top ones include:

WP Carey (WPC)

With WP Carey, nearly all of its rental agreements include contractual rent increases for inflation, according to BNK Invest. In fact, about 60% are tied to the consumer price index.

Well diversified with industrial, warehouse, office, retail, and self-storage, the REIT also pays a yield of 5.32%.  Even better, WP Carey is a REIT with 23 consecutive years of annual dividend increases.  Most recently, the company increased its quarterly dividend to $1.055 per share, payable January 14, 2022 to shareholders of record as of December 31, 2021.

Also, according to a company press release, “”We also remain uniquely poised to benefit from inflation, with the vast majority of our CPI-linked leases scheduled for rent increases over the next few quarters. Consequently, we believe W. P. Carey currently offers one of the best combinations of external and internal growth across the net lease sector, in addition to an attractive dividend yield.”

SPDR Dow Jones REIT ETF (RWR)

With an expense ratio of 0.25%, some of its top holdings include Prologis Inc., Public Storage, Simon Property Group, Equity Residential, and Realty Income.  Over the last year, the ETF exploded from a low of about $80 to $117.  From here, the RWR ETF could push well above $125, with patience.

As noted by The Wall Street Journal, “This fund, with $1.9 billion of assets, generally invests its total assets in the securities in the Dow Jones U.S. Select REIT Index, which include REITs and real-estate management and development companies. It has garnered total returns of 29% this year and 42% over the past 12 months, with a dividend yield of 3.1%.”

Federal Realty Investment Trust (FRT)

With 54 years of increasing dividends, the Federal Realty Investment Trust is a leader in the ownership, operation and redevelopment of high-quality retail-based properties located primarily in major coastal markets from Washington, D.C. to Boston as well as San Francisco and Los Angeles.   At the moment, it owns 106 properties, including 3,100 tenants in 25 million square feet, about 3,200 residential units.

In addition, “Strong results from all facets of our business were on full display in the third quarter,” said Donald C. Wood, Chief Executive Officer. “Collections have improved dramatically, new and exciting retail and office tenants are committing to long term leases at a very brisk pace, and our development and acquisition pipeline have never been more active. We’re more confident than ever that the places we create and the markets that we’re in are spot on in a post COVID world.”

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