2 High-Yield Energy Stocks Benefiting From Inflation

Every 10 years or so, inflation pops up and becomes a popular topic among the financial pundits. But any inflation that has occurred for the last several decades proved to be very temporary. In fact, inflation hasn’t been a real problem in 40 years. But it might be a big problem again.

In October, the inflation rate, as measured by the Consumer Price Index, rose to 6.2%, the highest year-over-year inflation in 31 years. It was also the sixth straight month of inflation growth of more than 5%. Many believe the numbers will only get worse in the months ahead.

The high demand and limited supply dynamic is a recipe for rising prices. Many assume that the supply issues will get worked out as the recovery continues. Supply will again match demand and this inflation will fade.

That may turn out to be the case, but maybe not.

Inflation Overview

Rising prices can be a psychological phenomenon as well as an economic one. Once that inflation “genie” gets out of the bottle it can be difficult to get it back in. There are also reasons why inflation could be a lot stickier now than in past decades.

Inflation is commonly defined as “too much money chasing too few goods.”

Even the more skeptical economists now admit that this inflation will last a while. Whether it lasts many years or just one year, it’s worth having investments that can hold up and even thrive amidst rising prices.

Here are two high-yield energy stocks that should benefit from the new inflation.

High Yield Energy Stock: Valero Energy (VLO)

Oil and gas are essential commodities, the prices of which tend to outperform inflation. Energy companies tend to thrive during times of inflation as the price of oil and gas tends to rise a lot more than the costs of extracting it and bringing it to market.

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