It's not gold, and it's certainly not Treasuries.
It's dividend stocks.
Companies that pay consistent dividends are in better fiscal shape than the U.S. government and the payouts significantly outpace those of Treasuries. The advantage over gold of course is that the yellow metal yields nothing - it's simply a store of value.
And yet dividend stocks also protect against inflation, since profits for the companies behind them tend to rise alongside prices.
To understand the advantages dividends can provide an investor during a down market, just look at the implosion of the dot-com bubble in 2000.
According to Morningstar research, the Standard & Poor's 500 Index lost 9%, while dividend-oriented mutual funds - including high-yielding stocks in the financial-services, mutual-fund and real-estate sectors - gained anywhere from 10% to 30%.
And I shouldn't need to remind you that dividends account for the majority of the stock market's returns.
A study by Yale economist Robert Shiller showed that in the 109 years from 1889 to 1998, the average real return on common stocks was 7%, of which 4.7% was represented by dividends.
While stock prices have been plunging, dividend payments are rising. Through Aug. 31, 243 companies in the Standard and Poor's 500 Index increased or initiated a dividend payment. In fact, dividend payments are expected to end 2011 up 18% from 2010.
That's the case for dividend stocks. Now I'm going to give you some potent investment ideas to help you get on board.
Investing in Dividend StocksGenerally speaking, there generally are two types of dividend stocks. There are large blue chips, which have a reliable but modest payout. And then there are the obscure companies, which have a higher yield but less safety.
In the first set you'll find companies like