Where is that inflation we keep hearing about for years?
Where is the "renewed inflation" we keep hearing about?
For the past many years many have been saying inflation is on the horizon. Beware.
And yet, that coming more inflationary horizon keeps being pushed back...
Today interest rates remain ever low and so around the world, just as they have for years while inflation is clearly not (yet) back. So the long successful investor mantra continues since the turn of this century: favor investment with high current income. For example high dividend yields on un-leveraged Asian growth stocks, especially those removed from being vulnerable/dependent of Western economies. (EU, USA)
Ten years ago, inflation did not come back, because the IT productivity enhancements finally showed up in the numbers. Then, 5 years ago it did not come back due to the "China price", which had a huge macro effect on taming global inflation.
Lately it did not come back because of the US induced global financial crisis....Yet, the inflation bugs keep telling us "its around the corner due to all the massive liquidity Western central banks have pumped into the system of late". Maybe but perhaps not?
Clearly billions have been lost in this latest crisis -and so the US consumer it now tapped out, and likely so for some time. Since the US consumer remains dominant with over 65% of the world's consumption, any retrenchment in the US will likely keep global inflation continued at bay. Perhaps this is why the global oil price is stuck below $80-90 a barrel and Gold, with its zero current income, is barely keeping up as an average investment?
Add to that, the reality that Asia (especially China) will not so quickly turn from a savings to a consumer nation for many good reasons. Thereby global growth will likely remain lackluster, along with inflation. IF so, high dividend yielding growth stocks will keep outperforming other assets.
Thailand has a number of such growth stocks, with zero debt and not much dependent on local politics, nor the US consumer. What is unique about these Thai growth stocks, as I spend effort in selecting them, is that they also pay a high current dividend, many times over the interest paid to savers at Thai Banks.
If the global and Thai economies spring back to live, these growth companies will become even more profitable. If on the other hand, the global and Thai economy remains subdued, as I tend to think, interest rates will remain low for some time -and yet these firms’ paid cash dividends will remain high. Either way they seem like a good place to invest some of your capital.
At New-Year I have identified 3 new quality companies which I think will pay very high dividends. Our members know them as they have at their hands my in person company visits reports and research.
Paul A. Renaud.