Dividends

Worried About Inflation?

By Kanwal Sarai
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worried investorAre you worried that your hard-earned cash will be worth less in future years? Inflation is a valid concern for all investors. Over time your purchasing power is reduced because the cost of goods continue to increase. Your best protection against inflation is: dividends.

“While placing money in a savings account may seem like the safest investment, banks don't pay nearly enough interest these days to compensate investors for inflation. In fact, interest rates are at record low levels, making now one of the worst times in history to let money sit in a savings or money market account (that goes for CDs too). Thus, savings are eroded in terms of future buying power, as product prices creep up over the long-term.”*

Dividends are cash payments made to shareholders. For example, if you own 1000 shares in company XYZ and the company is paying a dividend of $1/share you will receive $1000 each year in dividends, for as long as you own those shares and as long as the company continues to pay that dividend.

Increasing dividends provide you with increasing income, and historically dividends have more than kept up with increases in inflation. “In certain years, inflation may win, but over the long-term, by consistently picking high quality dividend stocks, it is possible to generate a higher yield than inflation.”*

Buy quality dividend paying stocks when they are undervalued, and you won’t have to worry about inflation again!

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* Source: NASDAQ "How Dividend Stocks Can Protect Against Inflation"

Kanwal Sarai

With more than 27 years of investing experience and a passion for investing and teaching, I demystify the world of investing. My goal is to help you grow your net worth by investing in quality dividend paying stocks. Build your own stream of increasing income today.

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Comments
  • Reply

    Dividends are a great tool for investors. More people should realize how helpful they can be to keep the dangers of inflation at bay. Thanks for the post!

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