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Preparing Your Dividends for Low Inflation

Aaron Levitt May 14, 2020

You don’t have to look far to see the impact of the COVID-19 pandemic. Aside from the actual deaths and patients stricken with COVID-19, the lockdowns, stay-in-place orders, and travel restrictions are starting to truly affect the economy. Data on a variety of fronts has collapsed in recent weeks, with manufacturing, employment, and even housing figures all showing signs of strain.

Well, you can add another piece of data to that list. We’re talking about inflation.

The latest consumer price index (CPI) and producer price index (PPI) figures have collapsed as the pandemic has curtailed demand for a variety of goods. Just a few months ago, we were worried about rising prices and higher interest rates. The reversal in inflation expectations has been dramatic to say the least.

Low inflation and even deflation can be a serious problem for many sectors of the market. The question now is what lies ahead and how are dividend investors going to be affected.

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