While that headline reflects the truth, inflation worries have tamed my equity investing appetite lately. The stock market’s long rise has me retreating to the sidelines for the most part. (Exception — and not a dividend play in the short term — I couldn’t help nibbling up a small stake on Toast (ticker TOST) when the restaurant automation company went public recently. Anyone who’s waited in a restaurant for what seems an eternity to get the attention of a server and pay a bill knows the restaurant industry is in dire need of automation technology, so that’s the value proposition there.)

Barron’s weighed in with an unusually pessimistic, or perhaps realistic, take on the inflation outlook recently. Here’s a link to the story. The headline sums things up pretty well. “As Labor Shortage Persists, the Fed Runs Risk of Runaway Inflation.”

The article posits that the Fed may have to start rising rates sooner, and more aggressively, than planned if the current labor shortage persists and wages continue to rise. Personally, I have a hard time cheering against higher wages. I remember staring at many a paycheck and thinking, “I’m worth way more than this.” And I suspect a lot of today’s workers similarly rebel against the notion that rising wages are a problem.

But rising prices are another issue. If wage gains and supply shortages continue to put upward pressure on prices, especially prices of consumer items tracked by key inflation measures, that could indeed lead to higher rates and put a damper on demand for dividend paying stocks, which have served as something of a stand in for bonds during this long period of historically low interest rates.

I pared my energy holdings a little bit this past week (and partly to free up funds to place my bet on TOST). For the most part, I’m sticking by my portfolio. But I wouldn’t be surprised to see stocks give back some of the big gains they’ve made in recent years. If I’m right, it may be better to wait to buy into the dividend world.

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