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Wall Street turned its focus back to the possibility of higher interest rates as the Fed is indicating a more hawkish turn to help combat 40-year high inflation. The recently-released Fed minutes showed that it is leaning toward a 0.50% rate hike at its next meeting, while shrinking its balance sheet.

The yield on the benchmark 10-year U.S. Treasury is back up at three-year highs and approaching 2.7%. The market was initially pleased by the Fed’s decision to lift its core rate by just 0.25%. The Fed opted for a small first hike amid the ongoing uncertainty caused by the Russian invasion of Ukraine. But the Fed minutes and recent comments by Fed governor Lael Brainard and St. Louis Fed President James Bullard appear to telegraph bigger rate hikes to come.

For instance, Bullard said Thursday that he thinks the federal funds rate should probably be at 3.5% right now, and not its current rage of 0.25% and 0.50%. The need to tamp down 8% inflation amid continued supply chain bottlenecks, which could be made worse by renewed covid lockdowns in China, appears paramount.

The recent drop has sent the S&P 500 back down below its 200-day moving average and the Nasdaq has continued to meet resistance at this crucial level. That said, bond yields are still historically low, and the outlook for S&P 500 earnings, margins, and revenues remains strong despite the setbacks (also read: Are Earnings Estimates Going Down).

Investors might want to remain in stocks in order to beat 8% inflation, while adding strong dividend yields that top U.S. Treasuries. Here are few stocks to consider buying to do just that.

VICI Properties Inc. (VICI)

VICI Properties is a real estate investment trust focused on gaming, hospitality, and entertainment. The firm’s diverse portfolio of casinos and resorts includes nearly 30 gaming facilities around the U.S., as well as over 250 restaurants, bars, nightclubs, and sportsbooks, and 25K hotel rooms.

VICI’s properties are leased to top operators, including Caesars, Hard Rock, Penn National Gaming, The Venetian Las Vegas, and many others. VICI also has investments in four championship golf courses, as well as 34 acres of undeveloped land next to the Las Vegas Strip, and beyond.

VICI Properties last August agreed to buy MGM Growth Properties in a deal that values the casino real-estate owner at $17.2 billion. That acquisition is projected to close in the first half of 2022 and would bring seven top-end Las Vegas resorts into VICI’s portfolio, as well as locations around the U.S. The deal will transform the already massive entertainment and hotel REIT into a true giant in the casino, resorts, and convention world.   

VICI’s 2021 revenue surged 23% to $1.5 billion, with its adjusted FFO, which investors can view as earnings, popped 11%. Zacks estimates call for its revenue to surge 32% higher in 2022 to $1.99 billion and then climb another 18% in 2023. Meanwhile, its adjusted FFOs are projected to pop 8% this year and 7% in 2023. And these projections don’t include the pending MGM deal.

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Image Source: Zacks Investment Research

VICI’s stagnant earnings revisions activity helps it land a Zacks Rank #3 (Hold) at the moment. The company has, however, consistently beaten our bottom-line estimates. On top of that, 11 of the 13 brokerage recommendations Zacks has for VICI are “Strong Buys.”

VICI shares have climbed 25% in the last three years to roughly match its industry, which includes a 75% run over the last two years. The stock is down 5% in the past 12 months, following its massive surge off its covid selloff lows.

At around $27.90 per share, VICI trades 17% below its records. VICI’s current Zacks consensus price target also represents 29% upside to Thursday’s levels. And the stock is trading right at its three-year median at 14.4X forward 12-month earnings and at a 30% discount compared to its industry.

The company’s current quarterly dividend of $0.36 per share is up 9% compared to its last payout. The payout helps VICI yield 5.04% at the moment to blow away its industry’s 3.12% average and destroy the 10-year U.S. Treasury’s 2.65%. The yield helps make VICI even more attractive, considering its solid valuation and strong outlook within an industry that’s roaring back as many people return to their normal, pre-pandemic lives.

AbbVie (ABBV)

AbbVie stock is in the midst of a gigantic run that began to kick into high gear last fall. Despite its 30% climb in 2022, investors with longer-term outlooks shouldn’t really be worried that they ‘missed out’ on the pharmaceutical giant for a number of reasons. ABBV is more diversified than ever and far less exposed to the success of one of the world’s top-selling drugs, which is crucial since Humira biosimilars are already available outside of the U.S.

AbbVie acquired Allergan for $63 billion in 2020. The deal brought Botox and other popular drugs into a diversified portfolio that features immunology, oncology, neuroscience, a strong R&D pipeline, and beyond. The company’s revenue went on to soar 38% in FY20 and another 23% in fiscal 2021 to hit $56 billion. The jump came even though international Humira revenue dropped nearly 10%. ABBV’s adjusted earnings also jumped 20% last year.

Zacks estimates call for its adjusted FY22 earnings to jump another 11% on 7.4% higher sales that would see it pull in $60.4 billion. AbbVie lands a Zacks Rank #3 (Hold) right now and has seen its FY22 and FY23 consensus earnings estimates pop since its release. And ABBV has consistently topped our quarterly EPS estimates.

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Image Source: Zacks Investment Research

ABBV stock is up 165% in the last five years, which includes a significant rough patch, to blow away the Large-Cap Pharma’s 75% and the S&P 500’s 100%. Wall Street really began to gravitate to ABBV stock as the tech and growth trade began to unwind in the fall of 2021, with the stock now up around 60% in the past six months vs. the benchmark’s 2% climb the Nasdaq’s 5% decline. ABBV stock popped again on Thursday to hit fresh records at around $175 per share.

Even with it trading at new all-time highs, AbbVie still offers solid value, trading at a 30% discount to its five-year highs at 12.4X forward 12-month earnings. This also marks an 18% discount to the Large Cap Pharma’s 14.9X and 37% value compared to the S&P 500.  

Despite its strong run and outperformance, AbbVie’s 3.25% dividend yield crushes its industry’s 2.42% average and the 10-year U.S. Treasury’s 2.65%. ABBV has also continually lifted its payout, with its dividend up 250% since its inception in 2013. Wall Street remains bullish on ABBV, with 10 of the 14 brokerage recommendations Zacks has at “Strong Buys” or “Buys.”