Rising inflation and rising interest rates are triggering investors to think about the best way to invest and protect their investments at this time.
It can be tempting to consider allocating more investments towards shares that pay high dividends, but this article from Dimensional Fund Advisors provides us with the evidence that this may be entirely the wrong thing to do.
Click the image to read Should You Chase Dividend Stocks to Combat Inflation and Rate Hikes, by Mia Huang, Senior Associate, Research at Dimensional.
The key takeaways being
- With inflation at its highest level in decades and the US Federal Reserve raising interest rates, investors may be wondering whether they should devote more of their portfolios to dividend-paying stocks.
- There’s no strong evidence that dividend stocks have delivered superior inflation-adjusted performance during periods of high inflation or rising interest rates.
- Investors can put themselves in a better position to achieve their financial goals by staying disciplined, diversifying broadly, and considering strategies designed to outpace or hedge against inflation and rising rates.
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