Morgan Stanley Makes Inflation-Protected-Yield Stock List at B of A

Bank of America has put together a list of what it calls attractive inflation-protected-yield stocks.

“With cash moving from worthless to yielding 3%-plus next year … amid [Federal Reserve interest-rate] hiking, we prefer companies that have strong free cash flow or distribute cash to shareholders,” Bank of America strategists wrote in a commentary.

“But in an environment where there are no signs of inflation subsiding, yield that is protected from inflation is also crucial.”

They see dividend growth stocks situated “between bonds (pure income, no inflation protection) and commodities (all inflation-exposure, no income).” Dividend stocks also “benefit from inflation, given that earnings are nominal,” the strategists said.

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