Best global stocks to watch amid inflation

Top 10 shares to watch during inflation

1. Lloyds
2. PepsiCo
3. Sanofi
4. Rio Tinto
5. Unilever
6. Roche
7. Starbucks
8. China Overseas Land & Investment
9. HSBC
10. AstraZeneca

Why should you trade these stocks amid inflation?

It looks like inflation is here to stay, with most consumer price indexes (CPIs) still elevated. In the US, prices inched up another 0.1% month-on-month to 8.3% in August 2022. In view of this, analysts expect the US central bank to raise interest rates further, which could keep equity prices under pressure for a while longer.

While there are numerous inflation hedges available to retail investors, such as commodities, bonds and funds, there are a number of stocks with healthy dividend yields and five- and ten-year annualised returns that could prove to be feasible long-term inflation hedges.

We take a look at ten stocks from around the world which analysts view favourably in the next 12 months.

Lloyds Banking Group PLC (LON: LLOY)

Although Lloyds' share price is down by 18% in 2022, the lower price could be a good opportunity for investors to buy into the stock, which is on track to giving out an above average dividend yield of approximately 4.9% this financial year, according to Morningstar Research.

UK’s second largest retail bank by assets raised its interim dividends for the first half of 2022 by 19% to 0.80p per share.

The stock has an annual dividend yield of 5.24% as of 29 September 2022, one of the highest in the country.

PepsiCo, Inc. (NASDAQ: PEP)

Among consumer staple stocks, PepsiCo has proven to be highly defensive, with share price dropping a mere 2.5% against the wider sector’s 10.5% decline in 2022.

During the year, the food and beverage manufacturer also joined the fabled Dividend Kings group, an exclusive list of companies who have managed to increase dividends every year for 50 consecutive years.

PepsiCo’s annual dividend yield stands at 2.73% as of end-September 2022, in line with the consumer staple sector. On a five-year basis, the company’s dividend yield is a higher 6.7%.

Sanofi SA (EPA: SAN)

Morningstar analysts named the French pharmaceutical group as one of its top stock picks to withstand inflation in the long run.

The company recently stated that it expected its third-quarter sales to receive a boost of approximately 10% to 11% and earnings per share of 12% to 13% from a stronger US dollar.

In July, Sanofi also raised its full-year earnings outlook on the back of higher-than-expected sales growth of the drug Dupixent.

Sanofi shares are down 12% year-to-date.

Rio Tinto Limited (ASX: RIO, NYSE: RIO, LON: RIO)

Rio Tinto Group, which has listings in Australia, the UK and the US, is involved in the exploration, mining, and processing of mineral resources such as gold, copper and iron ore.

While its shares may be down around 9% year-to-date, the stock has a five-year annualised return of 31%.

The mining company paid out an interim ordinary dividend of $4.3 billion (or $2.67 a share) in the first half of 2022, its second highest ever interim dividend sum. Free cash flow fell 30% year-on-year (YoY) to $7.15 billion, which covers the dividend amount for the period.

Unilever plc (LON: ULVR, NYSE: UL)

The UK fast moving consumer goods giant is also among researchers’ top stock picks against inflation.

Unilever shares have been relatively resilient in a turbulent year, with stock price up 2.5% in 2022. The consumer defensive stock has also achieved a ten10-year annualised return of 79%,

In terms of dividend yield, the group paid out a dividend of €0.3633 per share in the first quarter of 2022, which equated to a yield of 3.6%. This is higher than the sector average.

Unilever’s CEO Alan Jope recently announced his intention to retire by the end of 2023, which analysts find to be ‘not too surprising’ following its failed acquisition of GSK’s consumer health division earlier in the year.

Roche Holding AG (SWX: ROG)

Swiss healthcare and medical technology giant, Roche, is the fifth largest pharmaceutical company in the world by revenue, as at the end of 2021.

The conglomerate also has the distinction of being one of the few Swiss companies that has increased its dividend amount every year for 35 straight years. In 2021, Roche raised its annual dividend to 9.3 Swiss francs from 9.1 francs a year prior.

Roche shares also have a 10-year annualised return rate of 81%.

Starbucks Corporation (NASDAQ: SBUX)

Starbucks increased its quarterly cash dividend to $0.53 per share for its latest quarter (third quarter of 2022) from $0.49 a year ago. This makes 2022 the twelfth year that the café chain has increased dividend payments.

Starbucks also recently shared an ambitious financial outline for its next three fiscal years with investors. As part of its ‘Reinvention Plan’, Starbucks expects global and US comparable store sales growth to be in the range of 7% to 9% annually between fiscal 2023 and fiscal 2025, up from the previous range of 4% to 5%.

The company is also expecting global revenue growth in the range of 10% to 12% annually from fiscal 2023 to fiscal 2025, up from 8% to 10% previously.

China Overseas Land & Investment Ltd. (HKG: 0688)

While most Chinese and Hong Kong blue-chips saw their stock prices collapse this year, China Overseas Land & Investment (COLI) shares surged nearly 25% in the first nine months of 2022, as its market share across major Chinese cities continued to rise.

The real estate conglomerate’s contracted property sales from first-tier cities, including Beijing, Shanghai, Shenzhen and Hong Kong, grew 10.1% in the first half of 2022.

For the second half of 2022, the group is ‘cautiously optimistic that the real estate market will bottom out and rebound’.

HSBC Holdings PLC (LON: HSBA, HKG: 0005)

HSBC has been a relatively steady performer this year, with shares up slightly for the year.

The UK’s most valuable bank reported that revenue decreased marginally to $25.2 billion in the first half of 2022, primarily due to foreign currency translation impacts and losses on planned business disposals.

Despite the decrease, the company maintained a positive revenue and dividend outlook for the rest of the year.

Analysts predict that the bank could increase its dividend yield from 3.5% in 2021 to 4.1% in 2022.

AstraZeneca plc (LON: AZN)

AstraZeneca shares have performed steadily in the last five years, with an annualised return of nearly 100% since 2017.

The coronavirus vaccine manufacturer’s stock price also rallied 17% in 2022 alone.

Although the company’s dividend yield is lower than some of the companies on this list at around 2%, it has consistently kept dividend amounts stable over the last ten years.

Morningstar analysts also expect the pharmaceutical giant’s sales and earnings per share (EPS) to grow by 4% and 15% respectively next year.

How to take your position on shares

1. Choose whether to trade or invest in stocks
2. Pick the share you want to take a position on
3. Open or log in to our share dealing account if you’re investing, or our spread betting or CFD accounts if you’re trading
4. Decide on your position size and open your trade

Learn more about buying shares with us - from zero commission, or find out the differences between trading and investing.