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Good evening,
The current sharp decline in the dollar against the euro is having a negative impact on my portfolio (which doesn't really concern me) but also on my dividends, i.e. my income. Being totally incompetent when it comes to currencies, I'm asking you how much this decline could go in the months and years to come. What do you think?
This is a risk that should not be overlooked when investing in dividends. Especially since the best growing dividends are on the other side of the Atlantic and the dollar is a structurally weak currency. I talk about it at length on my blog.
I recommend starting by reading this series of 4 articles: http://www.dividendes.ch/2011/12/actions-en-devises-etrangeres-et-risque-de-monnaie-12/
The loss of capital is already painful, but if the income also drops, it becomes downright annoying.
For this reason, it is advisable to invest in stocks that react favorably to a fall in the dollar. And there are many of them!
In my 4 investment strategies I am constantly analyzing this criterion, under the name of $risk.
To answer the question "how low" more precisely... the dollar is bottomless! And the Fed is doing nothing to strengthen it, quite the contrary. But as long as companies can benefit from a weak dollar, then they will make profits and increase their dividends, more than enough to cover the decline caused by the currency.
And then of course you also have to place your pawns in other dividend-paying stocks, outside the dollar zone. My EX-US strategy offers a whole series of them.
Finally, we can also take advantage of the fall of the dollar to make purchases at a good price.
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