Rising Income Investments

Paul Ruedi

You may have heard me discuss the importance of “rising income investments” in the face of inflation in these columns and on our radio show. I am often using that phrase to describe stocks, but I am sure many people wonder why I call stocks rising income investments and why they are so important to address inflation. I think it is helpful to look at data from the past 50 years to answer both those questions.

The S&P 500 Index earnings per share in June of 1976 were $9.25 (per the S&P 500 earnings per share calculator on dqydj.com). Data from the end of June this year showed earnings per share of $270.01 – over 29 times higher.

The S&P 500 Index dividends per share were $3.76 in June of 1976, and the most recent data from June 2026 show that dividends were at $82.24 —21.9 times higher (per the S&P 500 dividends per share calculator on dqydj.com). This is why I refer to stocks as rising income investments; both company earnings and dividends paid to investors tend to rise over time.

According to the Bureau of Labor Statistics, $1 in 1976 had the equivalent purchasing power of $5.88 in June of 2026 – a 5.88-fold increase in the cost of living.

But over the long term, even an increase in the cost of living of this magnitude is dwarfed by the growth of just stock dividends over that same period, which let me remind you, rose nearly 22-fold. The price of the S&P 500 Index itself rose from 104.28 at the end of June in 1976 to 7,499.36 at the end of June this year — a 71.9-fold increase. Of course, we must always mention past performance is not an indication of future results.

On paper, everyone would invest in stocks for the obvious benefit of a rising income stream. But it is often quite difficult for people to do so. The rising income of stocks is delivered over long periods of time, but there are plenty of short periods of time where they will frustrate investors. There are times when inflation can run high and stocks will not provide a return to make up for that, like we experienced in 2022.

Investors will need to live through those tough times and stick with their investments in order to reap the long-term rewards of stock investing: an income stream that outpaces inflation by a wide margin. If you need help sticking with a diversified stock portfolio so you can reap the rewards of an income that rises over time, you may want to talk to a financial advisor.

Paul Ruedi is the CEO of Ruedi Wealth Management in Champaign, Illinois.