Beat Inflation With Dividends

The Federal Reserve Bank of San Francisco issued a report predicting stock prices could fall 13 percent in the next decade. That would be some accomplishment. I’m not sure if the researchers who issued the report are aware that they’re predicting the fifth-worst 10-year performance by the market in the last 74 years. The four worst: the 10-year periods ending in the years 1937, 1938, 1939 and 1940 – all time frames that were impacted by the Great Depression. Even the years of the Great Recession, 2008 and 2009, posted single-digit losses for 10-year returns.

I don’t think they’re right. But let’s assume their forecast is correct. You’re looking for a conservative place to grow your money and keep ahead of inflation. What should you do now? The answer: Buy stocks. If you own dividend-paying stocks, particularly those that raise their dividends every year, you should be able to beat the inflation rate and protect your purchasing power. And even if the Fed researchers are right and your stocks lose 13 percent over 10 years, you’ll still come out ahead.

Source: Investment U

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