Five stocks to beat inflation

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Five stocks to beat inflation

One of the things I like most about dividend investing is that there’s a good chance the income will grow faster than inflation. Take the FTSE 100’s dividend as an example. CPI inflation since 1986 has run at an annualised rate of 2.6% per year, whereas the FTSE 100’s dividend has grown by an annualised rate of 4.9% over the same period. So the index’s dividend has grown by 2.3% a year even after adjusting for inflation (and of course there have been substantial capital gains since 1986 as well).

Passively investing in a FTSE 100 tracker is one way to access the inflation-beating nature of dividend income. However, as an active investor I prefer to pick individual dividend-paying stocks in an attempt to get a market-beating dividend yield today and market-beating dividend growth tomorrow.

So with inflation in mind, this month I’m going to look at a group of companies that have raised their dividend by at least 2% (the Bank of England’s inflation target) every single year since 2008. Within the FTSE All-Share there are about 50 such companies. That’s too much for one article so I’ll restrict the list to stocks with a yield of more than 3% and then look at the five most consistent growers….

To read the rest of this article, click HERE to read Master Investor Magazine.


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