Inflation-Proof Stocks: Top 3 Picks to Weather Economic Uncertainty in 2024

Inflation now sits at 3%, close to the Fed’s target of 2%. This anticipated cooling has been much awaited. However, uncertainty remains about a potential interest rate cut. Although the Fed has promised it will cut rates, we don’t know when that will happen.

Economic experts’ opinions vary as to the exact timing of the interest rates. Predictions range from the first quarter to the second half of this year. This year is crucial with the economy coming out of a slump, but it helps to tread carefully.

So, if you aren’t ready to take big risks and would rather invest in stocks that can weather economic uncertainty, look for resilient businesses that have endured tough times. These are the companies that historically thrive despite the winds of macroeconomic troubles. With that in mind, let’s examine three inflation-proof stocks that can withstand any uncertainty. 

Visa (V)

Visa (NYSE:V) has proven its ability to thrive in any situation. With an excellent 2023, it is growing at an impressive rate. Visa caters to over 100 million merchants, holding a global presence.

Also, more consumer spending will help the business since it will see higher card transactions. Its business model allows it to generate plenty of cash each year. 

V stock has grown 93% in the past five years and is up 24% in the year. While the stock isn’t cheap and is trading at $258 currently, it is worth adding to your portfolio. Close to the 52-week high, Visa has potential to hit $300 soon. With a global presence, it ensures steady revenue growth from multiple countries. 

While the U.S. was battling high inflation, Visa was steadily generating revenue from other countries. The company reported a revenue of $32.7 billion for 2023 and a net income of $17.3 billion. With a dividend yield of 0.80%, Visa has enough cash to keep rewarding shareholders in the years to come.

McDonald’s (MCD)

A top growth stock to buy and hold for the long term, McDonald’s (NYSE:MCD) can weather any economic uncertainty anytime. It has consistently outperformed the market’s average return over the last decade, proving its worth.

Despite high inflation and low consumer spending, McDonald’s continued making money through its burgers and fries. While people couldn’t necessarily spend on extravagant dinners, they could opt for fast food at a budget-friendly cost.

The company offers lower-priced items which ensure steady sales growth. McDonald’s highly successful franchise business model ensures steady income year after year. In the third quarter, the company saw an impressive 8.8% year-over-year (YOY) increase in comparable store sales.

Also, MCD enjoys an attractive dividend yield of 2.25%. Trading at $297, MCD stock is at the 52-week high. But if you wait for the stock to drop, you might never get a chance to buy it. It will soon start soaring beyond $300, and we could see a higher dividend payout in 2024. In fact, McDonald’s has almost doubled its dividend in the past decade. So, although the stock isn’t cheap, the pros certainly outweigh the cons. 

PepsiCo (PEP)

PepsiCo (NASDAQ:PEP) has been around for over 100 years. It began as a cola business but has expanded over the years and has a wide range of products under its umbrella. Today, PEP offers a range of beverages and snacks that cater to a wide age group.

Its snack segment, Frito-Lay generates a significant amount of revenue in North America and is as huge as its beverages segment in the same region. Even in difficult times, the company can lean on the snacks business and make the most of its global sales footprint to generate revenue.

PepsiCo resorted to price hikes during periods of high inflation and showed its strength with sales and revenue growth. This proves that the company has pricing power and will not go out of business for many more decades. One of the largest beverage companies in the world, PepsiCo pays a quarterly dividend of $1.27 and has a dividend yield of 2.93%. 

Now, trading at $172, PEP has slowly but steadily maintained its upward momentum, hitting the 52-week high of $196 in May 2023. PepsiCo is one stock to own and hold forever, for the solid business and the passive income. 

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.