Your eyes and wallet aren’t playing tricks on you. The point is that the goods and services that we buy on a regular basis are increasing at a faster rate than what we have seen in a very long time.

A few days ago, the United States Bureau of Labor Statistics released inflation data for July – inflation measures the year-over-year increase in the price of goods and services – which showed a 5.4% increase in the consumer price index for all urban dwellers. Consumers (IPC-U) in the last 12 months. This matches the June inflation rate, as well as the links for the fastest rise in inflation for the CPI-U since August 2008.

In addition, the benchmark consumer price index, which excludes food and energy costs, rose 4.3% in July. That’s a slight drop from a reading of 4.5% in June, which marked a nearly 30-year high.

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Here’s how investors can fight inflation

As the price of goods and services rises, this threatens to reduce the purchasing power of consumers and their marginal money.

Perhaps one of the best ways to fight inflation is to put your money to work in dividend-paying stocks. Companies that pay a dividend are often profitable and have proven operating models. Additionally, they have a long history of outperforming their non-dividend paying peers.

According to a 2013 report by JP Morgan Asset Management, publicly traded companies that initiated and increased their payments between 1972 and 2012 generated an average annual return of 9.5%. By comparison, non-dividend-paying stocks have scraped and made their way to a meager annualized return of 1.6% over the same time frame.

But understand that you don’t have to buy a heavy, slow-growing business to earn a dividend that will help you beat inflation. The following three companies are prime examples of high growth dividend stocks that can help you crush inflation.

Three lab technicians examine the liquid in test tubes and take notes.

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AstraZeneca: 2.5% yield

After two decades of poor performance, the pharmaceutical stock AstraZeneca (NASDAQ: AZN) has evolved into the high-growth, cash-flowing powerhouse that Wall Street always knew it could be. Between its best-in-market 2.5% yield and sustainable double-digit growth rate, it can help put inflation in its place.

After overcoming its patent cliff and competition concerns, AstraZeneca turned to oncology and cardiovascular therapies, where it is recording most of its organic growth. A trio of oncology blockbusters (Tagrisso, Imfinzi and Lynzparza) led the way with sustainable double-digit sales growth. In general, anticancer drugs have benefited from better diagnostic screening, strong pricing power, and in some cases, longer duration of use. There’s also Farxiga, a next-generation type 2 diabetes drug, which saw incredible sales growth of 60% in the first half of 2021, and is currently generating sales of around $ 2.7 billion for the. year.

Beyond its potential for sustained organic growth, AstraZeneca is making waves on the acquisition front. Last month, it closed its $ 39 billion acquisition of ultra-rare disease drug developer Alexion Pharmaceuticals. The beauty of a successful rare disease operating model is that there is virtually no competition and insurance companies are not pushing back high list prices.

Additionally, Alexion has implemented AstraZeneca for the next decade by developing a next-generation replacement for its successful treatment, Soliris. This treatment, Ultomiris, is given every eight weeks, versus every two weeks with Soliris. This improvement in quality of life should help Ultomiris ultimately secure most of Soliris’ $ 4 billion annual turnover.

Cannabis plants in bloom on a large indoor grow farm.

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Innovative Industrial Properties: 2.4% yield

The cannabis industry is a great place to look for growth stocks; but did you know that it is also home to a blue chip dividend stock? Medical Marijuana Real Estate Investment Trust (REIT) Innovative industrial properties (NYSE: IIPR) has the potential to more than double its earnings over the next two years, while still analyzing a base annual payment of $ 5.60, which equates to a return of 2.4%.

Innovative Industrial Properties, or IIP for short, acquires facilities for growing and processing medical jars with the intention of leasing them for long periods. By early August, IIP owned 73 properties covering 6.8 million rentable square feet in 18 legalized states. The best part is that 100% of that rental space is leased, with a weighted average lease term of 16.7 years. Although IIP stopped reporting its ROI just over a year ago, it was just north of 13%. This suggests that the company is on the verge of a full return on its invested capital in maybe six or seven years.

Although acquisitions are the main source of growth for IIP, it should be noted that the company incorporated a very modest organic growth component. Each year, it passes on an inflationary rent increase of over 3% to its tenants, as well as charges a property management fee of 1.5% based on the annual rental rate.

Innovative Industrial Properties is also uniquely positioned to take advantage of the federal government’s lack of cannabis reform with its sale-leaseback program. As long as marijuana remains illegal at the federal level, access to basic banking services for marijuana businesses is limited. IIP fills the void by paying cash for cannabis facilities. He then rents these purchased properties from the seller. That way, the marijuana businesses get the money they need and IIP lands long-term tenants.

Several pipelines leading to oil storage tanks.

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Enterprise Product Partners: 7.9% return

Yes, high growth stocks can also have high yielding dividends. Master limited partnership Enterprise Product Partners (NYSE: EPD) and its nearly 8% return is a prime example of how consistent growth and a big dividend can help investors crush inflation.

Certainly some people will be wary of putting their money in an oil stock after what happened to the industry last year. The pandemic has resulted in a historic decline in demand for crude oil, which ultimately sent crude oil futures briefly plunging into negative territory. Fortunately, Enterprise Products Partners is well protected by its intermediate guidance.

While drillers may be directly affected by lower crude prices in the near term, mid-market companies like Enterprise Products Partners that manage the transportation and storage of oil, natural gas and natural gas liquids are not directly affected. . As of June 30, it controlled over 50,000 miles of transmission pipelines and could hold approximately 14 billion cubic feet of natural gas. The point is, Enterprise Products’ contracts with drillers are transparent and paid. In other words, the business knows exactly what kind of cash flow to expect from quarter to quarter. This allows management to easily make capital expenditures without compromising the dividend or the profitability of the company.

Speaking of its dividend, Enterprise Products has increased its annual base payout for 22 consecutive years and maintained a payout coverage ratio of between 1.6 and 1.8 in 2020 and 2021. A payout coverage ratio less than 1 would be untenable. At 1.6 to 1.8, this payout is rock solid.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.