With markets still in turmoil as investors react to recession fears, one investor recommends an obvious but believable move: high-dividend growth stocks. Wednesday brought exciting waters as the three major moving averages slid, recovered, and ended up ending the session with small losses. It marked a change from two days of relief protests that took place earlier in the week. Investors remained unconcerned as the Federal Reserve raised interest rates in an effort to curb inflation, stoking fears of an impending recession. In response to a tough market, Kevin Simpson, chief investment officer at Capital Wealth Planning, picked five stocks he sees as hedging against inflation through dividend increases. Simpson said these stocks have earnings to support their dividends, so they’re not companies that promise returns to investors that they can’t really deliver. Free cash flow, earnings and earnings before interest, taxes, depreciation and amortization, known as EBITDA, are some of the key metrics he looks at to make this statement about a company. These names also post strong compound annual growth, he said, meaning they not only have a dividend, but are growing each year. A stable game is getting interesting Although some market participants consider this type of play “boring”, he says, dividends are an important place to look because they guarantee returns for investors. investors hold, even during market downturns. “When you focus on fundamentals and pricing, you can worry less about the noise and the big macro picture in the background,” says Simpson. “If you invest in dividend growth stocks to help fight inflation, you’re at least insured to get some payout while you wait for better times or improved economic conditions.” good.” Among the stocks on the list is fast food giant McDonald’s with a 2.3% dividend yield. Not only has McDonald’s posted data that suggests a dividend increase could return, but the company’s investments in real estate can help investors diversify their portfolios further, he said. Devon Energy, one of the market winners benefiting from volatile oil prices, is also among Simpson’s picks. The stock with the highest yield among the names he ticked was 6.75%. Two healthcare companies, Merck & Co. and UnitedHealth Group, are included. Like consumer staples, he said, these stocks are particularly smart because people will always need health care, regardless of the conditions of the broader economy. RBC also rates UnitedHealth Group as a stock that can weather the current macro climate. Simpson says it’s always a smart play to choose companies with high-growth dividends and earnings to support them. “Investing in 2022 is different from how we invested,” Simpson said. “For the last 10 years or so, dividend-paying stocks may not have been the most exciting place to invest. But for active management practitioners, we all know that being boring can be boring at times. pretty good body.”