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3 Dividend Stocks That Are Crushing Inflation | The Motley Fool

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  Published in Stocks and Investing on Thursday, October 9th 2025 at 17:35 GMT by The Motley Fool
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Dividend‑Driven Inflation Defense: A Deep‑Dive into Motley Fool’s “3 Dividend Stocks That Are Crushing Inflation”

On October 9, 2025, The Motley Fool published an analysis titled “3 Dividend Stocks That Are Crushing Inflation.” The piece explores how certain blue‑chip, dividend‑paying companies can serve as a hedge against rising consumer prices while still delivering solid growth and cash flow. Below is a comprehensive summary of the article, its key take‑aways, and a deeper look at each of the three highlighted stocks.

1. Why Dividend Stocks Matter in an Inflationary Climate

The article opens by setting the scene: the United States is grappling with a resurgence of inflation, fueled by supply‑chain bottlenecks, energy price swings, and an expanding fiscal stimulus package. In this environment, traditional fixed‑income securities lose real purchasing power, making equities that pay consistent, growing dividends an attractive alternative.

Key Points Covered

• Cash‑Flow Resilience: Dividend payers usually generate steady cash flows, enabling them to maintain or increase payouts even when costs rise.
• Pricing Power: Companies with strong brands can pass higher costs onto consumers without significant loss of volume.
• Yield‑to‑Inflation Gap: The yield from dividends often outpaces inflation, delivering real returns to investors.
• Risk Management: Diversifying across sectors can mitigate sector‑specific risks that are amplified during inflationary periods.

The article cites the Fool’s “Dividend Growth” index, which historically outperformed the broader market by 1.7% per year over the last decade—an advantage that becomes even more pronounced when inflation is elevated.

2. The Three Dividend Stars

After establishing the broader thesis, the piece narrows in on Procter & Gamble (PG), Coca‑Cola (KO), and Johnson & Johnson (JNJ)—each selected for its robust business model, historic dividend growth, and demonstrated pricing resilience.

a. Procter & Gamble (PG)

Why PG?
PG is a household‑name consumer staples giant with a diversified product portfolio spanning personal care, cleaning agents, and over‑the‑counter pharmaceuticals. Its consistent dividend growth, averaging 6.5% annually for the past 25 years, underscores its commitment to returning value to shareholders.

Performance Highlights
- Dividend Yield: 2.3% (as of September 2025).
- Dividend Growth Rate: 6.7% YoY (2024).
- Stock Return vs. Inflation: Outperformed the CPI by 3.8% over the past 12 months.

Inflation Defense Mechanisms
- Brand Loyalty: Products like Tide, Pampers, and Gillette command premium pricing.
- Supply Chain Flexibility: PG’s global sourcing network allows for rapid cost adjustments.
- Robust Cash Flow: FY 2024 free cash flow of $17.4 billion supports both dividends and reinvestment.

Linked Resources
- Procter & Gamble’s FY 2024 Earnings Report (link provided in the article).
- Dividend Growth Chart from Yahoo Finance (included for visual context).

b. Coca‑Cola (KO)

Why KO?
Coca‑Cola’s beverage empire thrives on a blend of iconic branding and global distribution. Despite commodity price swings (especially sugar and energy), KO consistently increases dividends—at a 5.4% annual growth rate over the last 20 years.

Performance Highlights
- Dividend Yield: 3.1% (as of September 2025).
- Dividend Growth Rate: 5.8% YoY (2024).
- Stock Return vs. Inflation: Beat CPI by 4.5% year‑to‑date.

Inflation Defense Mechanisms
- Pricing Elasticity: Premium pricing for flagship products like Coke and Diet Coke.
- Diversified Portfolio: Includes teas, sports drinks, and bottled water, spreading commodity risk.
- Cash‑Rich Balance Sheet: $25.7 billion in cash, enabling dividend protection.

Linked Resources
- Coca‑Cola’s Investor Presentation (link in article).
- Coca‑Cola Dividend History (interactive chart on Fool.com).

c. Johnson & Johnson (JNJ)

Why JNJ?
JNJ operates across pharmaceuticals, medical devices, and consumer health products. The company’s stable dividend growth (6.3% average over 25 years) reflects its diversified revenue streams and high barriers to entry.

Performance Highlights
- Dividend Yield: 2.5% (as of September 2025).
- Dividend Growth Rate: 6.9% YoY (2024).
- Stock Return vs. Inflation: Surpassed CPI by 3.2% over the last 12 months.

Inflation Defense Mechanisms
- R&D Pipeline: New drugs (e.g., immunotherapies) keep the pipeline robust, mitigating revenue decline.
- Global Reach: Strong presence in emerging markets less impacted by U.S. inflation.
- Patents & Pricing Leverage: Proprietary products command premium pricing.

Linked Resources
- Johnson & Johnson’s 2024 Proxy Statement (link in the article).
- JNJ Dividend Growth Data (visualized on Investopedia).

3. Practical Take‑aways for Investors

• Add These Dividends to Your Portfolio: The article suggests allocating 10–15% of an equity portfolio to high‑yield, growth‑focused dividend stocks like PG, KO, and JNJ.
• Reinvest Dividends for Compounding: Reinvestment can significantly boost long‑term returns, especially when dividends outpace inflation.
• Monitor Macro Drivers: Even dividend stalwarts can feel the pinch of a sudden interest‑rate hike or geopolitical shock—so keep an eye on policy moves and commodity trends.
• Diversify Across Sectors: While consumer staples and healthcare are solid bets, mixing in utilities or consumer‑discretionary dividend payers can enhance risk‑adjusted performance.

The article concludes that dividend growth stocks act as a dynamic buffer against inflation, offering both a steady income stream and an equity exposure that tends to rise when the cost of living climbs. For investors looking to preserve purchasing power while still participating in upside potential, PG, KO, and JNJ represent a compelling trio.

4. Further Reading & Resources

The Fool piece links to several supplemental articles for readers who want to dig deeper:

• “How to Build an Inflation‑Resistant Dividend Portfolio” – A step‑by‑step guide to constructing a diversified dividend portfolio in 2025.
• “Dividend Aristocrats vs. Dividend Kings: Which Should You Pick?” – A comparison of the two elite dividend‑payer categories.
• “The Role of Cash Flow in Dividend Sustainability” – An in‑depth look at how cash flow metrics predict future dividend performance.

Readers can also explore the linked earnings reports, investor presentations, and interactive dividend charts to get a fuller picture of each company’s health and growth trajectory.

Bottom Line

Motley Fool’s “3 Dividend Stocks That Are Crushing Inflation” not only identifies three of the market’s most reliable dividend payers but also explains why they’re well‑positioned to keep up with rising prices. By marrying strong cash flow, pricing power, and a history of dividend growth, Procter & Gamble, Coca‑Cola, and Johnson & Johnson offer a practical, evidence‑based path for investors to protect real purchasing power in an inflationary world.