Do you want a real return on inflation? 2 Top Shares to Buy and Forget! | news

Real return on inflation with exciting top stocks? Ideally with graduates you can buy and forget? Of course, that is certainly possible. At least if you choose the right stocks.

I have two exciting graduates today who are definitely worth thinking about. Both have good protection against inflation at moderate valuations. But also certain characteristics that really make these stocks top stocks with solid return potential.

Top stock against inflation: WP Carey!

A first top stock with a solid return against inflation is WP Carey (WKN: A1J5SB). The US Real Estate Investment Fund currently has a dividend of around 5.1%. At the same time, a price-to-FFO ratio of around 17 is not too expensive and suggests a long-term return of just over 5%. Even though there was stagnation. But it does not exist now.

Finally, WP Carey can provide some things to avoid inflation. In particular, the contractually determined rent increases of either just over 2% on average or the increases adjusted for inflation: around 59% of the rent has this built-in buffer against inflation. This could now lead to a new phase of moderate growth in the mid-digit percentage. Just as long as inflation is so high.

However, WP Carey also has quality as a potential top stock. Since the listing in 1998, there has been the dotcom bubble, the financial crisis, the corona crisis and apparently also the current technology bubble. In all these times, the yield has not been cut. Does real estate as a safe haven have anything to do with it? Yes, very possible. So maybe now is a good time to reconsider the stock.

Munich Re: Solid, long-term return!

It is also another top stock that can deliver solid returns against inflation Munich Re (WKN: 843002). The DAX reinsurance company also has a moderate rating. With a share price of EUR 228.30, the dividend yield is 4.81%. It also has a price-to-earnings ratio of around 11, which also does not seem very expensive. Solid profit yields of over 9% pa may be possible. The business model can sometimes be cyclical due to uncertainties in disaster insurance.

The crux of the matter, however, is that Munich Re’s dividends have historically not been the case. Since 1969, management has always paid a constant dividend to investors. Those responsible now even expect earnings growth in the mid-digit percentage range. This means that dividends can increase and valuation can become cheaper.

Munich Re is therefore a top stock against inflation due to its valuation, the strong dividend and the moderate growth. But it’s also because of other little things: Stock repurchases mean that the relative share that each stock represents is rising consistently. It can mean additional returns for investors.

The article Do you want a real return on inflation? 2 Top Shares to Buy and Forget! first appeared on The Motley Fool Germany.

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Vincent owns shares in Munich Re and WP Carey. The Motley Fool does not own any of the listed shares.

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