The Pros And Cons Of Hedging Inflation With Dividends

By Doug Carey:

It is generally well known that dividend payments from most stocks tend to move up and down with the rate of inflation. Many investors choose dividend stocks just for this reason, and this can be a good strategy for hedging against inflation. Unlike with fixed income, companies can change the dividend payment at any time and we would expect that if nominal revenues are increasing due to inflation, then the dollar dividend payout should increase as well.

But there is a problem with some of the analysis out there when it comes to just how much one can hedge using dividends


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