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