In 1789, Benjamin Franklin wrote, “Nothing is certain except death and taxes.”
But he left something out…
As we learned the hard way in 2022, there’s a third inevitability in our modern life: inflation.
Last year, inflation soared to 9.1%, the highest in 42 years. And although it’s come down a little since then to 6.5%, that’s still over twice its long-term average.
Add in real wages shrinking for 21 straight months… and the average American has been getting steadily poorer for almost two years.
Between that and both stocks and bonds tanking, it felt like 2022 was a year where nothing went right.
But there was one thing that did…
Here at Intelligent Income Daily, our goal is to help you craft your investment portfolio to survive years like 2022. So that when the dreaded sting of inflation hits, you can continue to sleep well at night.
Let me show you why, in a year when almost everyone got poorer and real wages were falling at their fastest rate in decades, there was one asset helping regular people like you beat inflation and boost their buying power… and it continues to do so.
This is one of the most important facts in all of finance. Learning about it today could change the course of your financial future.
What Inflation Really Means for Your Money
Inflation isn’t something new that’s meant a higher grocery bill in recent months. It’s a tax on everyone and built into the modern global economy.
It’s averaged 3.2% per year since 1913 when the government began tracking it. That might not sound like much, but here’s what that actually means.
$1 in 1913 now buys $0.03 worth of stuff. Meaning dollar has lost 97% of its value over the past century.
You might think the Fed printing $4 trillion in two years caused inflation in 2021 and 2022. But it’s only partially true.
85% of money growth comes from banks. That’s what fractional reserve banking is all about. Banks hold about 10% reserves and lend out $10 for every $1 in assets. The more banks lend, the more money gets created.
That’s why 2% long-term inflation is the Fed’s goal. Zero inflation is impossible and would require perpetual recession. The Fed’s goal is that prices “only” rise by 22% per decade over time.
All this means is that you will get steadily poorer… Unless you can grow your income and wealth by 22% per decade.
If you’re retired and have no income, that means living off your investment portfolio. And getting 22% growth from that can be a challenge.
That’s where today’s solution comes in.
Dividends Can Help You Outpace Inflation
The best long-term inflation-beating asset in history has been blue-chip dividend stocks.
First, let’s take a look at how overall stock market dividends have performed over the past few decades…
(Sources: Multiple, New York University)
Since 1961, they’ve grown 2.3% faster than inflation.
But dividend growth blue-chips have done even better… These are companies with large market caps and are characterized by decades of strong performance and increasing dividends.
For 50 years, they’ve grown their dividends about 5.3% faster than inflation.
Since 1961, their dividends are up 23.3x, adjusted for inflation. Compare that to the S&P 500’s dividends, which are up 4x over the same period.
Dividend growth blue-chips have historically delivered about 10% inflation-adjusted returns every year, while the U.S. stock market has delivered 7%. Over a decade, that difference translates to 34% more wealth – more than enough to continue staying ahead of inflation.
Even in a year like 2022 where full-year inflation came in at 8%… The S&P raised its dividends by 11%… And dividend growth blue-chips raised theirs by an average 14%.
They didn’t just beat inflation, they smashed it.
With the power of the world’s best dividend growth blue-chips behind you – even if average wages don’t get a boost – you can still beat inflation… And reach your retirement dreams.
One easy way to harness that power is the ProShares Dividend Aristocrat ETF (NOBL). This exchange-traded fund (ETF) contains pure aristocrats, S&P 500 companies with at least 25-year dividend growth streaks.
In 2022, its dividends grew an incredible 45%, 5.6x more than inflation.
Over the long-term, dividend aristocrats beat the market by about 1% per year. NOBL is expected to keep doing that, with 11% future long-term returns vs. 10% for the S&P 500.
That makes it a solid blue-chip choice for not just beating the highest inflation in 42 years… but for growing your income about 5X faster than inflation over the long term.
Safe Investing,
Adam Galas
Analyst, Intelligent Income Daily
P.S. ETFs like NOBL are one simple way to invest in highly dependable dividend growth blue-chips.
But as we always say, with ETFs, you get the good, bad, and the ugly.
Being able to handpick the plays that get a spot in your portfolio can deliver truly outsized returns.
That’s why at Wide Moat Research, we’ve put together a portfolio of the best income-generating plays based on our research. To learn more about this hand-picked portfolio, click here.