Recently, the yield on risk-free 10-year treasury bonds soared 3.7% from 1.63% in early 2021, well above the dividend yield of 1.76% in the s & p 500 index, so bonds are becoming more attractive to investors than dividend-paying stocks.

But now is not the time to give up dividends as a source of income. Healthy dividends can increase the diversification of portfolio income. At a time when CPI is up 8.3% year-on-year, stocks with the ability to increase dividends are better able to secure investors' income streams than fixed-interest bonds.

Thomas Huber, fund manager of the $19 billion T. Rowe Price Dividend Growth (PRDGX), said: "stocks that can continuously increase dividends can protect investors from rising interest rates and inflation, as investors' incomes can continue to grow. "

While the Fed plans to continue to raise interest rates and economic growth will slow as the Fed fights inflation, companies with resilient revenues are still paying more dividends. Howard Silverblatt, senior index analyst at S & P Dow Jones Indices, estimates thatEven if earnings growth for companies in the s & p 500 declines, the index's overall dividend is still expected to grow by 10% this year. That would mark the first double-digit increase in the S & P 500 dividend since 2015.

By contrast, inflation-protected Treasurys (TIPS) offer virtually no protection to investors, with iShares TIPS Bond (TIP), an exchange-traded fund, down 11% this year (including interest).

Of course, stocks that increase dividends may also fall. For example, as a "dividend aristocrat"$Target (TGT.US)$It has increased dividends for 51 years in a row, raising the dividend by 20 per cent in June to an annualised dividend of $3.60 per share, or 2.8 per cent at a recent share price of about $153.

The dividends of the following companies are growing at a healthy rate and are relatively secure:

But investors have been selling Target Corp's shares, which are down 34 per cent so far this year. Columbia Dividend Income (LBSAX) fund manager Michael Barclays (Michael Barclay) said Target Corp was in trouble because of inventory problems at a time of high inflation and changing consumer spending habits. The fund has reduced its holdings in Target Corp.

$Chevron (CVX.US)$It is a long-standing stock with a large position in Columbia Dividend Income, which has a dividend yield of 3.6%. It has been one of the winners in the stock market with a dividend up about 37% this year.

Once the conflict between Russia and Ukraine is resolved, oil stocks will not perform very well if global oil demand falls sharply, and the global economic slowdown will further dim the outlook for oil prices. But Barclays believes that Chevron Corp is a company with flexible income. "Chevron Corp is very self-disciplined in capital expenditure, and diversification also brings some stability," he said. "

In January, Chevron Corp raised his quarterly dividend by 6% to $1.42 a share. It is expected that by 2023, the annual dividend will reach $5.97 per share, an increase of 5%, and the dividend payout ratio will reach 35%.

$Philip Morris International (PM.US)$The dividend yield is even higher, currently 5.2%, with a total return of 3.7% this year. The company recently raised its quarterly dividend by about 2%, or 2 cents, to $1.27 a share.

Philip Morris International Inc's products are sold to overseas markets, where tobacco consumption declines and regulatory problems are not as serious as in the United States. IQOS tobacco heating equipment currently sold overseas contributed 29 per cent of revenue last year, and the company aims to double that by 2025. "patiently waiting for the growth of this stock with a dividend yield of 5 per cent will bring considerable returns," said Huber, who owns Philip Morris International Inc's shares. "

Nor should investors ignore stocks with low dividend yields but rising dividends and sound core business.

For example, insurance brokerage companies$Marsh & McLennan (MMC.US)$The dividend yield is only 1.5%, but the dividend is growing rapidly. The company raised its dividend by about 10% in July to 59 cents a share, or an annualised rate of $2.36.

There is little demand for capital expenditure, which is a huge cash drain for many industrial companies and companies in other industries. Barclays believes that Verdersen's steady revenue growth has secured the dividend, and the company is expected to pay more. The dividend is widely expected to reach $2.45 per share in 2023 and the dividend yield will rise to 33 per cent.

Verdersen shares are down 9.6% this year (including dividends), compared with 17.7% for financial stocks in the s & p 500. CEO Daniel Glazer (Daniel Glaser) told investors in July that the company had shown resilience during the recession and that earnings per share had increased during all periods of economic contraction since 1952. Earnings growth is supported by inflation (which is good for insurance pricing) and higher interest rates (which are good for revenue and profitability of its trust business).

The hard-hit technology sector also has some attractive dividend-paying stocks.$Microsoft (MSFT.US)$It is one of Barclays' favorite technology stocks, and his fund has held shares in the software giant since 2004, when Microsoft Corp first began paying dividends. Although Microsoft Corp's dividend yield is only 1.1%, the dividend has been growing steadily, and last week the company raised its continuing dividend by 10% to 68 cents a share.

Most investors do not own Microsoft Corp shares for dividends, but want the company to bring capital gains in areas such as video games and enterprise software. Microsoft Corp's share price has fallen about 27% this year, roughly in line with the overall decline in technology stocks, but Barclays is still optimistic about Microsoft Corp's long-term prospects. "although the share price has fallen a lot this year, Microsoft Corp's profits and cash flow continue to grow," he said. "

The other two dividend-paying stocks are more defensive: medical equipment companies$Becton Dickinson & Co (BDX.US)$And health insurance companies.$Elevance Health (ELV.US)$. Huber is optimistic about the "defensive growth" business models of the two companies.

Bidi medical's dividend yield is 1.4%, and its share price has risen slightly this year, including dividends. The company raised its quarterly dividend by 5% to 87 cents a share at the end of last year and is likely to raise it again later this year.

Bidi Healthcare has a dividend yield of 1.1%, but this year it raised its quarterly dividend by 13% to $1.28 a share. The company's share price is about $475, and Huber points out that with a price-to-earnings ratio of 15 times expected 2023 earnings, "valuation still has room to rise." Bidi Healthcare is also likely to increase dividends, and companies that can increase dividends should not be underestimated at a time of market downturn.