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.
Dividend stocks provide a great partial hedge against inflation, providing a tangible return and cash flow to the shareholder. By selecting individual stocks with higher dividend yields - but that are still stable companies - it is also possible to significantly outpace inflation. Since dividend yields and inflation are in constant flux, it is sometimes necessary to exchange one stock (or several) for another in order to continue outpacing 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.
Source: NASDAQ
Related Articles:
- 7 Dividend Stocks Sporting A Five-Star Rating
- 10 Dividend Stocks Ignoring The 4% Rule
- Dividend Stock Bubble: Is It Even Possible?
- 8 Dividend Stocks To Consider While Waiting on Apple to Pay Its First Dividend
- Holding Bonds Could Push Your Portfolio Into The High Risk Category
Dividend Stocks Can Protect Against Inflation
Posted by D4L | Monday, November 19, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
When looking for dividend stocks to invest in, it is advisable to choose companies that have strong dividend histories and stable balance sh...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.