Inflation-Proof Your Portfolio: Uncover the Best Dividend Stocks for Consistent Income Growth
Beating inflation using growing dividend income
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Weekly Market Update 🗒️💡
This past week, the S&P was up 2.6% marking its best performance in a single week since March. This is now the S&P’s 5th positive consecutive week, a streak we haven’t seen since November 2021.
The NASDAQ is now up more than 26% from its bear market low and up 3.3% on the week, marking its best week since March. It has been up for 8 weeks in a row making this the longest streak since 2019.
The Dow Jones is up almost 1.3% this past week marking its 3rd positive week in a row.
Both the S&P 500 and Nasdaq have hit their highest levels since April 2022.
Stocks are starting to rally and investors are seeing their portfolio’s return to pre-pandemic levels.
Is this the start of another strong bull run? Only time will tell, but investor confidence in the market is climbing and I’m continuing to buy.
Tweet of the Week
Inflation - the silent tax we all hate.
If you’re not careful, it will eat into your purchasing power without you even noticing it. Inflation is a measure of the overall impact of price changes for a basket of products and services.
The percentage of inflation year over year gives us a single value representation of just how much more expensive living is.
But there’s a way to fight back. And it’s called using dividend stocks to maintain purchasing power.
Here’s the thing, if you’re buying non-dividend paying stocks, the only way you win that investment is by cashing out (provided that the stock price has gone up).
With dividend stocks, you win when the dividend growth is rising at a faster pace than inflation.
Let me explain:
Based on data from April 2023, inflation was 4.4% in Canada and 4.9% in the US.
For simplicity, let’s round this number up to 5%.
If inflation remains at 5%, that means you’re losing 5% of your purchasing power.
How do we combat this?
We invest in stocks that grow their dividends by more than inflation on an annual basis.
Not only do you earn the income but you also have the ability to benefit from an increase in share price.
In today’s post, I’ll be sharing 3 dividend stocks that are outpacing current inflation rates so you can keep more of your money.
Texas Instruments Inc. (TXN)
Texas Instruments was once known for calculators, but now generates the majority of its revenue from manufacturing semiconductors. The company received an A grade from Morningstar for its strong financial health.
The company has experienced solid earnings growth and is expected to continue growing at an EPS rate of 10% annually over the next 5 years.
To top it off, the company has increased its dividend for 19 consecutive years (green flag) and is averaging 14.9% annualized dividend growth over the past 5 years.
The stock price is not at all-time highs as of now, but it has outperformed the S&P 500 by an annual average of 7.4% over the past 10 years. That’s no small accomplishment.
Broadcom Inc. (AVGO)
A semiconductor company that offers a wide range of products. This giant continues to achieve growth and expand its product lines through 35 different acquisitions including CA Technologies, Symantec, Silicon Spice, and many more.
Morningstar gave this company a financial health grade of B. However it has seen some serious growth over the past half a decade. Earnings have grown over 10.4% in the last 5 years and analysts are forecasting a yearly EPS growth of 9.4% per year.
The stock is currently trading close to its all-time high and outpaced the S&P 500 by an average of 26.3% per year over the last 10 years, making it the top-performing stock on this list.
The stock dividend has grown an average of 21.3% annually over the past 5 years and has increased dividends for 13 consecutive years.