How Dividend Stocks Combat Inflation

Hope is not a strategy, denial is not a river, and cash flow is always king.

— Michael Underhill, Capital Innovations

Whenever pundits talk about inflation, they compare it to lame-duck investments like a savings account or low-yield bonds. And when they aren’t doing this, these experts discuss “safe-havens” like gold or crypto currencies.

Nobody talks about productive assets, like dividend stocks.

Last weekend I went grocery shopping here in Mexico. The supermarket had a big display of Old Spice deodorant, 48 pesos per stick, or $2.42 in U.S. currency.

I go through roughly one stick of deodorant every two months.

At $2.42, that’s $14.52 per year.

Back in March, I bought four shares of The Procter & Gamble Company (makers of Old Spice) and each share pays $3.65 in annualized dividends.

$3.65 x 4 = $14.60

In other words, owning four shares of Procter & Gamble gives you a year’s supply of deodorant “on the house.”

It doesn’t matter if the stock goes up, down, or trades sideways. As long as the company sticks to its business plan, it’s putting cash dividends in your pocket.