DIVIDEND STRATEGIES AS ONE OF THE METHODS OF MANAGING PRICE RISKS OF BUSINESS STRUCTURES IN THE CONDITIONS OF INFLATION THREATS

Abstract

The article is devoted to studying dividend trading strategies to mitigate inflation risks and preserve the actual value of capital for investors. The research explores the main threats that inflation poses to investment portfolios, including the erosion of purchasing power and the negative impact on returns from traditional passive strategies, such as the S&P 500 index. The advantages of dividend stocks as an effective alternative for investors seeking regular income and protection of their assets from inflationary pressures and other market risks are thoroughly analyzed. Unlike passive index investing, dividend-paying stocks offer the potential to maintain real value over time, making them a viable strategy for those concerned about long-term financial stability in the face of rising inflation.

The article further examines critical factors that influence the choice of investment strategies, such as an investor's age, risk tolerance, and financial goals. These factors are essential in determining whether dividend strategies are appropriate for a particular investor's profile, as the suitability of such strategies can vary significantly depending on individual circumstances. The paper also addresses the potential drawbacks of dividend strategies, emphasizing that they may only be suitable for some investors. In particular, younger investors with a higher risk tolerance and a longer investment horizon may find growth-oriented strategies more aligned with their goals. In comparison, older investors or those with lower risk tolerance may benefit more from the stability offered by dividend-paying stocks.

Moreover, the research highlights the importance of adapting investment approaches to inflationary environments, where capital preservation becomes a key concern. In such scenarios, dividend-paying stocks provide a buffer against inflation by generating steady cash flows, which can help offset the loss of purchasing power over time. However, the article also stresses that relying solely on dividend strategies has risks, including the potential for dividend cuts or the underperformance of specific sectors during different market cycles. Thus, diversification and a well-balanced portfolio remain crucial elements of any effective inflation-hedging strategy.

This article aims to provide a comprehensive understanding of how dividend trading strategies can be employed to respond to inflationary risks. It underscores the need for a personalized approach to investment strategy selection, taking into account each investor's unique financial needs and goals. Through this analysis, the paper contributes to the ongoing discussion on effectively navigating inflationary periods while maximizing returns and minimizing risk. The findings offer valuable insights for individual investors and financial professionals seeking to optimize portfolio performance in an inflationary market environment.