Do Dividend Increases Keep Up With Inflation?

Perhaps you are wondering whether the income from the portion of a retirement portfolio that you allocate to dividend-growth stocks will keep up with inflation. It’s an important question. Inflation is the hidden leak that all retirement plans must account for. The news is good. While stock prices move up and down all the time, dividends almost always go up. Whoa! Dividends only go up?? At first glance, that sounds like a ridiculous statement. Companies cut or freeze their dividends all the time. Didn’t a bunch of banks drop their dividends, or cut them to a penny, just a couple years ago? Didn’t BP eliminate their dividend shortly after their rig blew up last year? Yes, they did. But in a well-selected portfolio of dividend-growth stocks, the total dividends paid by the portfolio almost always goes up. In any given year, the vast majority of stocks in the portfolio that... Read more