What should I buy right now to fight against hot inflation? These 3 dividend stocks could give shareholders a sizeable pay raise

It might be tempting to jump out of stocks completely, but here’s the reality: No one knows for sure what the market will do next.

The good news? You don’t have to time the market to make money in stocks. There are companies that provide cash returns to investors through highly reliable dividends.

Some of them even have the strength to consistently increase their payout year in and year out. For dividend investors, it’s like getting a pay raise — something that’s much-needed with inflation at 40-year highs.

Here are three companies that, in all likelihood, will hike their dividends in June.

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First Bancorp (FNLC)

Compared to the financial juggernauts on Wall Street, First Bancorp is a rather small institution. The bank has $2.5 billion in assets and provides commercial and retail banking services through its 18 locations in mid-coast and eastern Maine.

But there is a good reason to check out this under-the-radar stock: dividend growth.

Five years ago, the bank was paying quarterly dividends of 23 cents per share. Today, it pays 32 cents per share — marking a payout increase of 39%. The stock currently yields 4.3%.

The company has a solid business to back its generous shareholder returns. In Q1 of 2022, First Bancorp’s net income grew 8.8% year over year to $9.7 million. And its first-quarter dividend represented just 36% of its earnings per share for the period.

A conservative payout ratio leaves a margin of safety and room for future dividend hikes.

Considering that management last raised the company’s dividend in June 2021, they might want to continue the streak this year, too.

Kroger (KR)

In an era where physical stores are under serious threat from online merchants, Kroger remains a brick-and-mortar beast.

Shares of the supermarket giant are up 16% in 2022, in stark contrast to the S&P 500 Index’s 14% year-to-date decline.

The economy moves in cycles, but people always need to shop for food. As a result, Kroger can make money through our economy’s ups and downs.

The company has expanded its online presence, too. Kroger’s digital sales in 2021 clocked in 113% higher compared to two years ago.

With a dividend yield of 1.6%, Kroger may not get the attention of yield-hungry investors. But its payout has been consistently on the rise. Its last dividend hike was a 17% increase announced in June 2021.

Given how well the company’s business has been doing, another payout increase should be right around the corner.

Realty Income (O)

If you follow real estate stocks, you’ve probably heard of Realty Income. The San Diego-based REIT has a portfolio of over 11,000 properties that are under long-term lease agreements with its commercial tenants.

Commercial real estate was impacted heavily by the pandemic. But Realty Income didn’t have to worry too much because of its diversified tenant base. Its top 10 tenants also include pandemic-proof companies such as Walmart, FedEx, and Walgreens.

In fact, the company collects around 43% of its total rent from investment-grade tenants. A diversified, high-quality tenant base allows Realty Income to pay reliable dividends.

Since the company was founded in 1969, it has paid 622 consecutive monthly dividends. Moreover, the REIT has announced 115 dividend increases since its listing on the NYSE in 1994, with the last 98 being consecutive quarterly increases.

The stock provides a generous yield of 4.3%. Based on its past schedule, Realty Income’s next dividend announcement — which should come in June — will likely be an increase.

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