Dividends4Life: Beat Bear Markets With Dividend Stocks

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Beat Bear Markets With Dividend Stocks

Posted by D4L | Tuesday, April 03, 2012 | | 0 comments »

Trying to time the market, particularly with your long-term portfolio is a fool’s game. Instead, here is a time tested (yet underappreciated) method for riding out volatile markets. Look for stocks that are what I call “Perpetual Dividend Raisers”. These are stocks that have a track record of raising the dividend every year. For most stocks, that will keep ahead of inflation and the high yield will provide a buffer in a market downturn.

For example, let’s say you’re invested in Darden (NYSE: DRI), the operator of Olive Garden, Red Lobster and LongHorn Steakhouse restaurants. It currently pays a 3.4% dividend yield. Darden has raised the dividend every year for seven years. Over the past five years the average raise was 28% per year. If the company’s dividend growth rate slows down to 14% per year, the yield would still climb to 5.6% in five years and swell to 10.7% in ten years.

Source: Investment U

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