An Investor's Guide to Inflation Protection

Investors often overlook inflation. We may take into account what our projected returns might be, but we don't look at the purchasing power that amount of money will have by the time we want to spend it. That's why Fool.com contributor Chuck Saletta has put together a portfolio stacked against inflation. His Inflation-Protected Income Growth portfolio is made up of companies that pay strong dividends and keep upping them, and have the staying power to do so over the long run, companies such as J.M. Smucker (NYSE: SJM  ) , Teva Pharmaceutical (NYSE: TEVA  ) , and United Technologies (NYSE: UTX  ) .

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  • Report this Comment On December 20, 2012, at 12:01 AM, neamakri wrote:

    I'm not convinced. Let's see; inflation is around 3%, and SJM pays 2.4% As doctor Phil would say "how's that working for you?"

    I need to give you something positive here...AT&T (T) is paying 5.3% and has paid reliable dividends for over 25 years. That works for me!

  • Report this Comment On December 20, 2012, at 6:49 AM, TMFBigFrog wrote:

    Hi neamakri,

    Thanks for taking the time to read this article and send in your comments. The inflation protection aspect of the portfolio comes from the growth rate of the dividends, not the current amount of the dividends.

    Consider that SJM's dividend went from $0.48 per quarter to $0.52 per quarter back in August. That's an increase of 8.3%. If you owned SJM stock before the increase, you got an 8.3% raise with the increase.

    No guarantees in the market, of course, but it's a risk I'm willing to take to attempt to combat inflation over the long haul.

    -Chuck

    Inside Value Home Fool

    Disclosure: I own shares of SJM.

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