For Your Information
Protection Amid Inflation Expectations
July 20, 2021
Despite assurances from the Federal Reserve inflation expectations are on the rise, at least among consumers. To defend against inflationary pressures and to protect purchasing power, investors should consider the benefits of owning dividend growth stocks.
A June survey from the central bank’s New York district shows median inflation expectations over the next 12 months jumped 4.8%, an increase over May readings and the highest in history for a series that goes back eight years.1 Forecasts for inflation, earnings, income growth and spending have all increased.
Federal Reserve Chair Jerome Powell insists the recent inflation spike won’t last, saying supply chain bottlenecks are among the issues which will abate as the economy returns to normal. He recently told a Senate Banking Committee the Fed is still “a ways off” from reducing asset purchases. “You wouldn’t react to something that is likely to go away.”2 Still, the survey shows the median inflation outlook over the next three years remains unchanged at 3.6%, well above the 2% the Fed considers healthy for a growing economy.
Protecting Purchasing Power
For risk-averse investors, downside protection from potential market drawdowns and inflation should be a priority. At Bahl & Gaynor, we believe the best protection against inflation without compromising market equity returns is ownership of dividend growth stocks that seek to deliver a growing stream of income, especially in unpredictable markets. If you are nearing retirement and don’t want inflation to impact your purchasing power, consider dividends as a well-accepted hedge against inflation.
Our hand-selected team of experts built their careers on the merits of dividend-growth investing. For more than 30 years, we’ve endeavored to consistently deliver exceptional service to our clients with customized plans that seek to meet and exceed expectations.
Ian T. Owens
Investment advisory services provided through Bahl & Gaynor Investment Counsel (“B&G”), a federally registered investment adviser under the Investment Advisers Act of 1940. Registration does not imply Information or a certain level of skill or training. More information about B&G can be found by visiting www.adviserinfo.sec.gov and searching by the adviser’s name. This is prepared for informational purposes only and may not be applicable to your particular situation or need(s). It does not address specific investment objectives. Information in these materials are from sources B&G deems reliable, however we do not attest to their accuracy. Past performance is not indicative of future results. Indices and benchmarks are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Index return information is provided by vendors and although deemed reliable, is not guaranteed by B&G. No fiduciary relationship exists because of this commentary. If you have any questions regarding the indices or investments referenced in this presentation, contact your B&G investment professional.