As an investor, you must focus on the long term. The market's routine temper tantrums guarantee that there'll be days, months, and maybe even years where your investments will lose money. Without a proper long-term perspective, you run the very real risk of letting temporary and normal volatility turn into permanent and irreparable losses.

With that long-term perspective, though, comes a whole new perception of real risk. Over the course of your lifetime, the biggest investment risk you'll likely face isn't necessarily the loss of your money. Instead, it's the loss of your money's purchasing power. Inflation slowly and inexorably eats away at your money's ability to buy you those things you need to support yourself and your family. At 4% inflation, $10,000 stuffed in a mattress for the next 25 years will, at that time, only buy about what $3,750 will buy today.

Of course, nobody really stuffs their money in their mattress. When it gets right down to it, though, many people do the equivalent with the income their investments throw off. Far too many investors think bonds are the way to invest for income, given their stable payments and guaranteed return of principal at maturity. The problem, though, is that a 30-year bond that pays 4.9% today will still be paying that same 4.9% on the same base, 25 years from now. An income that might be barely sufficient today certainly won't be enough that far in the future.

Invest for income growth
Fortunately, as an investor, you're not stuck choosing only between the stagnant income of bonds and the volatile growth of stocks. There's an entire class of investments out there that will let you get the best of both worlds. If you invest appropriately, you can get both current income and enough income growth to outpace inflation. Yes -- in effect, if you know what to look for, you can have it all.

Finding the right investments that'll let you do that is exactly what my Foolish colleague Mathew Emmert does at Motley Fool Income Investor. The ultimate investments for this strategy are companies that:

  • Pay decent dividends today
  • Have routinely hiked those payments as their operations grew
  • Look capable of continuing to raise their payouts well into the future

The companies listed below have decent histories of doing just that. Better yet, they all apparently have the potential to keep up the practice.


Current Yield

Dividend CAGR*

Kimco Realty (NYSE:KIM)



Chevron (NYSE:CVX)



Reynolds American (NYSE:RAI)



Kinder Morgan Energy Partners (NYSE:KMP)



US Bancorp (NYSE:USB)



Green Mountain Power (NYSE:GMP)



General Growth Properties (NYSE:GGP)



*CAGR = Compound annual growth rate.
All values split-adjusted

As you can see, owning the stocks of the right companies gives you a way to pick up solid income today, along with enough payout growth to keep up with inflation, too.

Get started now
With the right companies in your portfolio, you can get paid good money today and even better money tomorrow. There's simply no better way to assure that your investments can keep performing for you over the long haul than with solid, income-growth oriented businesses. Join us today at Income Investor to get started building a portfolio that can keep pace for your entire lifetime. Your 30-day free trial starts here.

US Bancorp is an Income Investor pick.

At the time of publication, Fool contributor Chuck Saletta owned shares of Kinder Morgan Management, a related company to Kinder Morgan Energy Partners, and his wife owned shares of General Growth Properties. The Fool has a disclosure policy.