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Protection Amid Inflation Expectations

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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.

Consumer Expectations
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.

Fed Thoughts
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
Portfolio Analyst




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