If analysts are correct, lower interest rates today will bring an unwelcome spike in inflation in 2026.
While it may not be anything like the 7% to 8% inflation rate of 2022 and 2023, the consensus view is that inflation will remain above the Federal Reserve’s preferred 2% target for some time to come. That makes dividend stocks more attractive, particularly those with yields that outpace the rate of inflation.
Dividends have accounted for 40% of the stock market’s total return in the last 90 years. The ability to deliver passive income that grows every year is a key reason why dividend stocks deserve a place in any portfolio.
As investors look to position their portfolios for 2026, three high-yield dividend stocks trading below $20 stand out, each in a sector offering defensive qualities if inflation picks back up.
Energy Transfer: 8% Yield Backed by Cash Flow, Not Commodity Prices
Energy Transfer (NYSE: ET), which owns and operates a pipeline network of over 140,000 miles across the United States, provides investors with an attractive dividend with an attractive 8.1% yield.
As a midstream company, Energy Transfer benefits from fee-based, asset-backed services that provide a consistent stream of revenue via long-term contracts, throughput volumes, and service fees regardless of which way commodity prices move.
In 2025, the company’s network will be well-positioned to capture the growing need for natural gas. The United States continues to set natural gas production records to capture the export demands in Europe as well as to meet the anticipated demand of data centers.
ET stock is down about 16% in 2025, and some investors will cite three out of four quarters in which adjusted earnings per share (EPS) came in below expectations.
However, this decline is due to significant capital investments made by the company, not a weakness in its balance sheet. That investment, which was made without adding debt or diluting shareholders, is likely to pay off in the coming years.
Huntington Bancshares: A Regional Bank That Performs in Any Rate Environment
Regional bank Huntington Bancshares (NASDAQ: HBAN) pays a dividend that yields 3.52%, backed by stable fundamentals and prudent lending practices.
Although many regional banks and finance stocks benefit from lower interest rates, Huntington’s asset-sensitive loan book allows it to avoid margin compression even if rates stay higher-for-longer.
The bank is also less exposed to the higher-risk commercial real estate segment as opposed to its peers. Capital levels are healthy, enabling share buybacks and dividend support while maintaining regulatory flexibility.
Headquartered in Columbus, Ohio, Huntington Bancshares has operations in several states in the Great Lakes region. HBAN stock is up just over 8% in 2025. But that’s a little deceptive because most of those gains have come since the Federal Reserve began its rate-cutting campaign.
Analysts have given the stock a consensus price target of $19.64, a gain that’s supported by expectations of around 12.3% earnings growth in the next 12 months.
Albertsons: A Defensive Grocery Stock Trading at a Valuation Discount
One of the largest U.S. grocery stores, Albertsons Companies Inc. (NYSE: ACI ) pays a dividend that yields 3.47%. The company does business under brand names such as Albertsons, Safeway, and Vons.
ACI stock is down about 12% in 2025 and has been in a mostly bearish trend since 2024, when U.S. regulators blocked the company’s merger with The Kroger Co. (NYSE: KR).
Much of that drop is due to the company’s investments in store remodels, technology, and wages, which have eaten into the bottom line on a year-over-year basis.
However, analysts have a consensus price target of $23.77 on ACI stock as they believe those investments will start paying off with low single-digit same-store sales growth largely due to its growing digital presence and pharmacy sales. However, this is more of a valuation than an earnings story.
At around 8.2x forward earnings, the stock is trading at a discount to its historic average.
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The article "3 Cheap Dividend Stocks That Can Beat Inflation and Pay You to Wait" first appeared on MarketBeat.
