7 Stocks That Can Keep Inflation from Eating Away at Your Portfolio

In the five years ending January 17, 2025, Walmart Inc. (NYSE: WMT) stock has delivered a total return of 158.61%. That’s 93% higher than the S&P 500 has delivered over that same period.  

The reason for Walmart’s performance as a defensive stock is easy to see. The company continues to deliver for their core consumer with everyday low prices to help them buy their staple items. The retailer is also showing an ability to capture the attention of higher net-worth consumers who are shopping at the retailer to make their discretionary dollars last longer. 

But this isn’t just a demand story. Walmart is embracing the digital economy via its Walmart+ app that is helping the company become a significant player in e-commerce. And to help facilitate that transition, Walmart is embracing automation and artificial intelligence (AI) to streamline its operations.  

Another way that WMT stock can help you profit from inflation is via its growing dividend. Walmart is a Dividend King that as of January 2025 has increased its dividend for 52 consecutive years.  

If inflation does trend higher, oil prices will be a likely cause. Despite oil prices being range bound since 2022, many analysts still expect that crude oil prices will reach or exceed $100 between 2025 and 2030. A resurgent global economy along with geopolitical concerns are cited as the reasons that will drive global demand.  

That means oil stocks should be on your radar and Occidental Petroleum Co. (NYSE: OXY) is one of top names to consider. In addition to the likelihood for higher oil prices, one reason to consider OXY stock is the company’s strong cash flow which has accelerated even with oil prices trading in a distinct range. Occidental has already shown investors its willingness to use that cash flow to reward shareholders in the form of share repurchases. 

That’s undoubtedly caught the attention of Warren Buffett who has made Occidental Petroleum one of his preferred stocks over the last five years. And OXY stock has become more attractive as a defensive play since it began increasing its dividend after cutting it sharply in 2020.  

Pharmaceutical stocks are solid defensive stocks at any time. However, the case for Eli Lilly and Company (NYSE: LLY) has an additional tailwind. That comes from the company’s blockbuster products in the GLP-1 arena, Mounjaro and Zepbound.  

Mounjaro is a groundbreaking treatment for Type-2 diabetes and Zepbound is Lilly’s entry into the booming market for obesity treatment. Individuals may cut back on many things if inflation heats up, but they will always make room for their prescriptions. That’s particularly true of both Mounjaro and Zepbound, which patients need to continue taking to maintain the benefits.  

Through the third quarter of the company’s 2024 fiscal year, Eli Lilly has generated a non-GAAP gross margin of 83%, which is higher than the sector average. And the company has a deep pipeline of products, including in the critical area of oncology, that will continue to help the company grow revenue and earnings well into the future. LLY stock also pays a dividend, which it has increased for 11 consecutive years as of January 2025.  

Merck & Co. Inc. (NYSE: MRK) is another inflation-fighting stock in the pharmaceutical sector. The bullish narrative with Merck centers around its oncology portfolio and its flagship drug, Keytruda which continues to be approved for earlier stage cancers and is experiencing robust global demand from metastatic indications.  

However, Keytruda is only one drug in the company’s extensive oncology portfolio. That portfolio is supposed to grow from $10 billion in 2023 to over $20 billion by 2030.  

Beyond oncology, Merck has a solid track record of developing innovative medicines covering vaccines, infectious diseases, immunology, and other unmet medical needs. The company has a proven track record of bringing drugs to market while being able to produce solid returns for shareholders. One element of those returns is a dividend that yields over 3.3% in January 2025, has an average annual growth rate of around 5%, and has been increasing for 14 consecutive years.  

Next up on this list of inflation-resistant stocks is Mondelez International Inc. (NASDAQ: MDLZ). This is more than an “everybody loves chocolate” story, although Mondelez is the parent company of both Cadbury and Toblerone.  

Actually, it’s more the opposite. One reason investors should be bullish on Mondelez is that its portfolio of products is less dependent on cocoa prices when compared to The Hershey Company (NYSE: HSY) which Mondelez made an offer to acquire in 2024.  

The company sells its products in over 150 countries worldwide. Its portfolio includes some of the best-loved consumer names such as Oreo’s, Ritz crackers and CLIF bars. This is part of a go-to-market strategy laid out by Mondelez’s CEO that includes a stable of iconic brands, which give the company pricing power. 

And Mondelez uses its earnings to reward shareholders through share buybacks and a dividend that has increased for 13 consecutive years as of January 2025.  

Food is one area where consumers tend to feel inflation directly. It will also be one of the last areas for inflation to ease its grip. But McCormick & Company Inc. (NYSE: MKC) remains an attractive stock to consider regardless of the direction inflation takes. 

The reason is that “food” doesn’t just mean food you prepare at home. Since 2022, inflation-weary consumers have been in a tug-of-war between eating out versus eating at home. At first, it didn’t matter as consumers were just ready to get back to their pre-pandemic routine. But restaurants have raised their prices, and many consumers are swiftly making the pivot back to a home-cooked meal. 

McCormick benefited from this trend in 2020 as consumers had to restock their neglected spice drawers. And that doesn’t even count the company’s recent acquisitions, which have brought names like Frank’s Red Hot and Cholula under its umbrella.   

MKC stock is a Dividend Aristocrat, having increased its dividend for 38 consecutive years as of January 2025. That dividend currently has a yield of 2.45%.  

The last, but certainly not the least inflation-busting stock is consumer staples giant Kimberly-Clark Co. (NYSE: KMB). An oft-mentioned comment that bears repeating is that at any given time, you probably have several Kimberly-Clark products in your home. The brand’s portfolio is that broad-reaching.  

And that portfolio, which includes names such as Huggies diapers and Kleenex tissues, comes with pricing power. That pricing power shows up on the company’s bottom line which has continued to show year-over-year growth despite the impact of inflation on consumers. Additionally, the company continues to increase its free cash flow and pay down its debt.  

Those are the attributes of a “forever” stock, but it’s also one that investors can buy for growth in the coming years. Investors are also buying a Dividend King that currently has a yield of 4.03%. Plus, as of January 2025, KMB stock trades at around 17.4 forward earnings which is a slight discount to the Consumer Staples sector average of 20.5x.