Beat Inflation Now with Inflation Dividend Investing

Have you considered a lower risk strategy called dividend investing to beat inflation? It is often the simplest strategies which work the best over the long-run. Investing should be boring and allow to sleep soundly at night.

Dividend is a tried and tested strategy, but can it help you beat inflation?

What Is Dividend Investing?

The first part of dividend investing, consists of buying stocks which pay a regular and above average dividend. The second part of dividend investing, is to take dividends received and reinvest them to create even more income.

Dividends rely on cash earned to be paid out. Cash is king. Many firms have large revenues but do not produce much cash. As a result companies which pay regular dividends are likely to have stronger financials underpinning them.  This also means they are less risky.

Inflation, is the rise in the price of goods over the long-term. This means you overall wealth decreases as you have to spend more to get the same back as you would normally.

Why Dividend Investing Can Beat Inflation

Firstly if the company has strong financials you can rest assured you will receive a dividend.

Secondly, dividend investing is also about capital growth. Companies who grow their dividends year-on-year are rewarded with share price increases.

Thirdly, Increased inflation usually means increased interest rates. Companies who can pass on cost increases are usually the staples, such as food companies and pharmaceuticals. These are the very sectors who pay the highest dividends.

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