Sometimes you have to dig deep for a ray of sunshine but not today. Even with volatile capital prices and a further big increase in interest rates this week, dividend-paying companies are doing their job. While it is true that dividends in general have ratcheted higher for more than a decade (minus a small glitch in 2020), 2022 is likely to be the best year for North American dividend increases since 2014. And that will serve us all very well.
To be fair, I have to acknowledge that anytime we suffer capital volatility, it creates discomfort for investors. But it bears repeating that we do use periods of outperformance (the last three years) to take us through period of underperformance. Not only that…all of the income we expect you to need on a rolling three year basis is securely tucked away in a fixed income ladder and not reliant on the whims of capital markets.
What makes me so upbeat in this situation is that we can continually rebalance portfolios to our investment policy, thus taking advantage of adding in terrific dividend-paying securities at very attractive prices. These are companies that are increasing your dividends on the back of solid earnings, have good cash flows, and can meet this commitment to you now and in the future.
There you have it…very sunny indeed.
Livingston Wealth Management Group