It’s been a long time since anyone has had to worry about keeping up with inflation. The recent 5.4% reading of the consumer price index is the highest inflation reading since 2008. Since then, inflation was most of the time below 2%. Prices are higher and considerable up in all areas of life. Fed Chairman Jerome Powell is not concerned about inflation and vowed to keep interest rates near 0%.
As interest rate products like Treasuries, Corporate bonds, time deposits but even high-yield junk bonds can’t keep up with inflation. You have to turn to a high dividend paying strategy that focuses on dividend growth and capital appreciation that also increases buying power. If you’re relying on income from investments, that income needs to be able to grow. But there aren’t many safe investments that will do that.
By investing in stocks that raise their dividends every year, you’re boosting your buying power. While all stocks carry risk, dividend growers outperform over the long term and have never had a down 10-year period as measured by the S&P 500 Dividend Aristocrats Index. If your dividends are growing by 7%, 8%, 10% or more, you won’t have to worry about rising prices because your dividends should have you covered.