The decision by National Savings & Investment (NS&I) to withdraw its enormously popular inflation-linked savings certificates earlier this month acted as another body blow for investors anxious to circumvent that horrible combination of low interest rates and rampant inflation.

At a time when most savings accounts offer negligible post-inflation and tax returns, the decision removes one of the few guaranteed methods by which investors could see a positive return on their capital.

More than 500,000 investors managed to secure some form of inflation-linked savings certificate in the space of just four months, a concerted flurry of investment activity which serves to highlight the paucity of reliable alternatives.

Not every investor wants to join the gold rush, especially as the metal offers nothing in the way of yield, nor are most investors interested in assuming even more risk by buying into the latest Asian growth story or dabbling in all manner of ‘soft’ commodities from pork bellies to wheat.

Of course, perhaps the greatest part of the NS&I certificate appeal was its certainty. Not only were investors assured that, irrespective of the level to which inflation rises they will receive a higher return, but that their cash was safe. It is a compelling sales pitch — no wonder so many folks piled in.

Government-backed guarantees are scarce nowadays, so for investors who missed out on the latest NS&I offer, the only alternative is to accept a modicum of commercial risk if they are to avoid a situation where their real return on investment is negative and has been corroded by inflation, the rate of which currently comfortably exceeds net interest rates.

A sizeable number of investors have been content to acquire shares in the largest, highest-yielding, FTSE 100 companies, though most have done so without a specific sector focus. The investment incentive has been dividend returns alone.

Yet there is one overlooked sector which, at the time of writing, not only boasts annual average yields of 4.17 per cent, but has also established what are effectively index-linked dividend growth targets until 2015. Four water companies (Pennon, United Utilities, Severn Trent and Northumbrian Water) have each provided details of the extent to which they envisage their dividends growing for the next four years.

Pennon, which yields 3.86 per cent, is targeting growth of RPI plus four per cent, while the other three companies offer RPI plus either two or three per cent.

These are numbers investors cannot ignore. Granted, there is an element of commercial risk when investing in equities however large they might be (the average market capitalisation of this particular quartet is £3bn), but all four have traded within relatively narrow share price bands over the past 12 months.

With the exception of Northumbrian Water, which recently attracted an offer 26 per cent above its share price, there have been no fireworks in terms of capital growth among the water companies.

Yet as their collective pricing is linked to the Retail Price Index and their borrowing costs are likely to remain low for some years, those index-linked dividend payouts appear very attractive indeed.