While rational traders participate in the equities market to see solid returns on their investments, the present paradigm encourages everyone to consider the best income stocks to buy now. Of course, no one is going to complain about robust capital gains; That is, until tax season. But the inflationary crisis we’re in drives more emphasis on passive income than ever before.
As of this writing, the annual inflation rate for the U.S. is 8.6% for the 12 months ended May 2022, the largest annual increase since December 1981. Naturally, consumers mostly feel the heat when they pump gasoline into their cars or buy groceries for their family. To mitigate this sticker shock, the best income stocks to buy may help.
Another factor to consider during this period is inflation’s impact on real earnings. Because prices of goods and core utilities are rising, you’re basically receiving a pay cut or hidden tax. Obviously, such a circumstance can be incredibly frustrating, though it cynically adds to the bullish case for the best income stocks to buy now.
Income Stocks to Buy: Chevron (CVX)
Though hydrocarbon-related companies have been unpopular for a very long time, the dirty little secret is that they’re relevant and necessary. As I’ve mentioned several times before, fossil fuels are difficult to quit because of their high energy density. Essentially, for just a gallon of gas, you can move an SUV down the freeway for 20 or 30 miles.
You’re just not going to find that kind of density from electric vehicles, which is one of the most powerful (albeit cynical) arguments bolstering Chevron (NYSE:CVX). One of the big oil giants, Chevron will likely never court the public’s sympathies. Setting that issue aside, though, the company is extraordinarily relevant, especially because Russia’s reckless war in Ukraine has effectively shelved much of the world’s energy supplies.
As The Economist pointed out recently, international policymakers have warned that the Ukraine crisis could last for years. Such a scenario presents myriad questions about societal and economic stability. However, it’s unavoidable that it keeps the lights on at Chevron and then some, making it one of the most effective among the best income stocks to buy.
While the vast majority of the global public is ready to put the coronavirus nightmare behind it, Nature.com reported on a concerning new phenomenon. While Covid-19 vaccines are due for an upgrade, “emerging variants and fickle immune reactions mean it’s not clear what new jabs should look like.”
Nevertheless, after two years of lockdowns and various mitigation mandates, the fear of Covid-19 has been fading. Instead, concepts like retail revenge or revenge travel have taken over public sentiment, which suits AbbVie (NYSE:ABBV) just fine. As a pharmaceutical giant that now owns the Botox neurotoxin, AbbVie is an underappreciated investment for the return to normal.
Back during the worst of the pandemic, the nation experienced what a Washington Post op-ed referred to as our pajama moment. Those days are now gone, with powerful voices in business demanding that their workers return to the office. In other words, the emphasis is now back to looking good, which may help lift Botox sales.
In turn, ABBV stock is one of the best income stocks to buy now — featuring a forward yield of 3.7%.
Income Stocks to Buy: IBM (IBM)
Amid the tight competition in the technology sphere, IBM (NYSE:IBM) often times gets overlooked. It’s not necessarily fair considering that the company has been making significant inroads with cloud computing, cybersecurity, artificial intelligence and other groundbreaking innovations. Still, it’s tough to shed a less-than-favorable reputation.
However, IBM is so far getting the last laugh. On a year-to-date (or YTD) basis, shares are down 2%, which isn’t exactly riveting stuff. But when stacked up against popular tech plays — many of which are hemorrhaging sizable double-digit figures — IBM might as well be shooting to the moon. Indeed, since December of last year, Big Blue has been quietly making a comeback.
Long-term investors may want to consider IBM simply on the basis that it has its hands in several relevant technologies. Adding in its passive income potential is a sweet bonus, particularly with its forward yield of 5.1%. Sometimes, slow and steady wins the race for the best income stocks to buy.
While myriad oil and natural gas companies may qualify for the best income stocks to buy now, one of the challenges for companies tied to the upstream business model — or the exploration and initial production of fossil fuels — is that energy pricing can be volatile. For a little bit more stability, you may want to consider midstream operators like Enbridge (NYSE:ENB).
Midstream firms specialize in activities such as processing, storage, transportation and marketing of hydrocarbon products. The beauty about Enbridge is that the company owns and operates the largest network of oil and gas pipelines in North America, making it an ingrained component of the transportation sector and more broadly, national security.
What really makes ENB stock stand out as one of the best income stocks to buy is its generous payout. Featuring a forward yield of 6.2%, Enbridge can help cushion some of the shock associated with inflation. In addition, data on vehicle miles traveled suggests that the company has significant upside ahead.
Income Stocks to Buy: Agree Realty (ADC)
Among the largest real estate investment trusts (REITs), Agree Realty (NYSE:ADC) is particularly attractive for its relevance. While the consumer economy is undoubtedly hurting from the soaring inflation rate, Agree Realty invests in properties net leased to some of the biggest names in commerce such as Walmart (NYSE:WMT) and Home Depot (NYSE:HD).
Put another way, while many analysts expect a recession of some sort, few are calling for a devastating depression that would result in unprecedented cuts to spending. The likely scenario is that consumers will focus more on essential goods, which should benefit Agree Realty.
Another factor that bolsters the case of ADC stock being one of the best income stocks to buy now is that it distributes passive income on a monthly basis. As you know, the frequency of life — mortgage/rent payments, internet service contracts, utility bills — is monthly. Therefore, Agree Realty helps you get the funds you need when you need them the most.
LTC Properties (LTC)
If you’re seeking a diversified portfolio of the best income stocks to buy, LTC Properties (NYSE:LTC) is well worth consideration. For one thing, this REIT also offers monthly payouts, enabling you to align your passive income with the bills that you pay. Furthermore, this payout frequency enables faster compounding, providing a critical tool to combat inflation.
Beyond this administrative point, though, LTC Properties is attractive for its core business. The REIT specializes in senior housing and healthcare, primarily through sale-leasebacks, mortgage financing, joint-ventures, construction financing and structured finance solutions. LTC’s portfolio is roughly divided in half between senior housing and skilled nursing properties.
As myriad publications have mentioned, baby boomers are retiring in large numbers, with this pace of retirement accelerating. The unique factors of the Covid-19 crisis have also led to workers older than 55 representing the majority of participants of the Great Resignation.
Basically, over the next several years, demand for senior care should rise exponentially. Therefore, LTC stock appears a solid long-term bet among the best income stocks to buy.
Income Stocks to Buy: Southern Copper (SCCO)
With the rise of meme stocks and cryptocurrencies, it’s apparent that quite a few people have the speculation bug in their bones. Well, I’m the type of person that likes to give the audience what they want. So, if you want to dial up the risk-reward factor for the best income stocks to buy now, you may want to have a look at Southern Copper (NYSE:SCCO).
To be clear, copper prices are slipping badly, largely on global recession fears. With inflation reducing real earnings, consumers are naturally going to reduce their expenditures, first avoiding the discretionary purchases and later much of the lower-priority essentials. Eventually, such cuts are going to impact copper demand, which isn’t great for SCCO stock.
At the same time, copper is critical for the industries and technologies of tomorrow, most notably electric vehicles (or EVs). Moreover, with the electrification of transportation being a vital component of the broader strategy to reduce foreign oil dependencies, SCCO stock might be worth consideration.
Oh yeah, the company features a forward yield of 10%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.