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Dividend Growth Has Outpaced Inflation, But Not By As Much As It Seems

In the article "Illustrating Inflation Vs. Dividend Growth" , several specific stocks are identified which, over the past 25 years have had dividend growth that has handily exceeded inflation. An examination of dividend growth from the entire S&P 500 versus the inflation rate from 1961 to 2011 (50 years) indicates that while indeed, overall dividend growth has outpaced inflation on average by roughly 1.25% per annum, there were 20 years (40% of the years) when dividend growth failed to keep pace with inflation. Examining the entire S&P 500 virtually eliminates selection bias in analyzing the true relationship between dividend growth and inflation.