Chasing yield
When high inflation reduces the value of a company's future earnings (a dollar earned today won't be worth as much a year from now), its stock price usually falls. But dividend payers are the exception. As the strategists at mutual fund family MFS Investment Management put it in their 2011 outlook letter, "[T]he market says `we don't care or trust earnings derived from inflation,' but the market does not distrust dividends."
What that means is that high-dividend paying stocks are a boon in high-inflationary times. MFS chief strategist James Swanson recommends low-priced utility and technology companies. He says utilities stand to benefit from a recovery U.S. economy and they payout a steady stream of their income.
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Last updated December 28 2010: 12:32 PM ET
