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One of the best inflation hedges for your investment portfolio is a familiar friend you’ve relied on since forever.

Long a non-issue, inflation has become a factor investors need to grapple with as a result of economic shifts caused by the pandemic. The old standby list of inflation-fighting investments includes gold, commodities, real estate investment trusts, real-return bonds and cash. Don’t forget to consider dividend-growth stocks as well.

Globeinvestor.com can help us find dividend-growth stocks that have increased their cash payouts by inflation-beating amounts over the past five years. The most recent inflation rate for Canada was 2.2 per cent in March, but that’s a low hurdle for strong dividend growers. Instead, let’s look at stocks that have annualized dividend growth rates of at least 7 per cent.

We’ll confine our search to the blue-chip stocks of the S&P/TSX 60 Index, and we’ll leave out companies in resource sectors. Gold miners and energy companies can be strong dividend contributors, but they’re subject to economic cycles that can constrict their ability to maintain, never mind increase, dividends. A counter-argument is that an inflationary environment would be good for commodity stocks.

Here are the S&P/TSX 60 Index stocks in all non-resource sectors with five-year annualized dividend growth of at least 7 per cent:

  • Restaurant Brands International Inc. (QSR-T): 36.4 per cent dividend growth
  • Canadian Pacific Railway Ltd. (CP-T): 20.5 per cent
  • Alimentation Couche-Tard Inc. Class B (ATD.B-T): 20.3 per cent
  • CCL Industries Inc. Class B (CCL.B-T): 19.1 per cent
  • Canadian Tire Corp. Class A (CTC.A-T): 16.7 per cent
  • Magna International Inc. (MG-T): 15.8 per cent
  • Open Text Corp. (OTEX-T): 14.3 per cent
  • Metro Inc. (MRU-T): 14.2 per cent
  • Canadian Natural Resources Ltd. (CNQ-T): 13.1 per cent
  • Power Corp. of Canada (POW-T): 12.4 per cent
  • Enbridge Inc. (ENB-T): 11.7 per cent
  • Manulife Financial Corp. (MFC-T): 11 per cent
  • Algonquin Power and Utilities Corp. (AQN-T): 10 per cent
  • TC Energy Corp. (TRP-T): 9.3 per cent
  • Toronto-Dominion Bank (TD-T): 9.2 per cent
  • Brookfield Asset Management Inc. (BAM.A-T): 8.8 per cent
  • Dollarama Inc. (DOL-T): 8.3 per cent
  • Emera Inc. (EMA-T): 8.3 per cent
  • Sun Life Financial Inc. (SLF-T): 7.8 per cent
  • Telus Corp. (T-T): 7.1 per cent

Long-time dividend investors know that there’s an ebb and flow to the rate of dividend growth at even the best-run companies. Whatever dividend-paying company you’re researching, it’s always worth a look at the investor relations page of its website to track long-term dividend growth patterns. Consistency is king.

-- Rob Carrick, personal finance columnist

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Stocks to ponder

Teck Resources Ltd. (TECK-B-T) Greenlight Capital’s David Einhorn issued a strongly bullish call this week on the Vancouver-based diversified mining company that is expanding its copper production. Copper is a key input in the production, storage and transmission of electricity, and there is a need for a lot more electricity in a world moving away from carbon emissions to a greener environment. As Larry MacDonald reports, the famed U.S. hedge fund manager thinks Teck is a better way to invest in the metal than industry leader Freeport-McMoRan.

The Rundown

Here’s when you’ll know it’s time to run from equities because of rising inflation

Few equity investors have experience in an inflationary environment and this makes new research from Credit Suisse global strategist Andrew Garthwaite all the more timely. His recent report serves as an inflationary road map to guide investors through the potential pitfalls of the new market backdrop, complete with important indicators that may warn of impending weakness in equities. Scott Barlow reviews what they are.

Also see: Investors looking for protection as inflation pressures bubble, stocks volatile

How murky legal rules allow Tesla’s Musk to keep moving markets

With his cult following, Tesla boss Elon Musk has amassed considerable power to move markets with his musings, but murky rules make it difficult for regulators to rein him in. Katanga Johnson and Chris Prentice report.

Why this is the year to ‘sell in May and go away’

Value investing prof Dr. George Athanassakos has a crystal ball that’s saying portfolio managers will be heavy sellers of equities as this month wears on. He explains why he thinks this is a spring to lighten up on equity exposure.

Faith-based investing makes up ground in gains and convenience

The intersection of faith and money can be complicated. But investing by the tenets of your faith has become easier, and in many cases it’s neither less profitable nor more risky than investing without a religious screen. There are Islamic exchange-traded funds and real estate investment trusts, Jewish venture capital funds and Catholic separately managed accounts. And these strategies are not just attracting investors of the same faith. Paul Sullivan of The New York Times tells us more.

European banks: Q1 full house is no winning hand just yet

European bank shares are up 25 per cent already this year, more than double the gains of the underlying STOXX 600 index. Since November, the sector has rallied some 66 per cent. Yet, after a decade of travails, more than one blockbuster earnings season may be needed to win over sceptics. Julien Ponthus of Reuters reports.

Others (for subscribers)

The highest-yielding stocks on the TSX, plus risk data

Number Cruncher: Which of these IT stocks offer conservative investors both safety and value?

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Global IPOs breach all-time record on U.S. SPAC boom, flurry of tech listings

Globe Advisor

Will vaccines give a shot in the arm to pharmaceutical stocks?

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Ask Globe Investor

Question: How do I calculate a capital gain or loss on a U.S. stock held in a non-registered account?

Answer: You must convert both the purchase cost and sale proceeds to Canadian dollars, using exchange rates in effect at the time of each transaction. For example, say you bought 100 shares of Johnson & Johnson at US$50 each in May, 2011, when the Canadian dollar traded at US$1.03. The cost, in Canadian dollars, would be about $4,854 (5,000/1.03). If you sold the shares recently at US$160 when the loonie was at 80 US cents, your proceeds, again in Canadian dollars, would be $20,000 (16,000/0.8). Your capital gain would therefore be $15,146 ($20,000 minus $4,854), less any commissions paid on the purchase and sale.

--John Heinzl

What’s up in the days ahead

With the Canadian dollar moving up sharply of late, should investors be looking into currency-hedged ETFs for their exposure to the U.S. market? John Heinzl will have some timely advice.

Retail, PMIs and a timely tantrum anniversary: World market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

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Compiled by Globe Investor Staff