Dividends4Life: Will Dividend Stocks Save You In A Bear Market?

In recent years, many investors have been attracted to the "safety" and "wealth-building" appeal of dividend stocks. Therefore, it is prudent to examine history and ask: "Will my net worth take a big hit holding blue-chip dividend payers in the next bear market?" Before we explore the facts, it is important to understand that well-intentioned investors have a habit of repeating the same mistakes over and over again.

Dividend strategies can be very useful and add value for investors. The hole in some of these dividend strategies is they focus exclusively on when to buy. As noted on Twitter (TWTR), when to buy is important, but it is less than half the investment battle. All stocks carry risk, including blue-chip dividend stocks. Having said that, there are numerous benefits to investing in blue-chippers, such as consistent dividends, established brands, top-tier management, access to DRIPS, and in some cases, substantially lower volatility relative to the broad stock market. If we understand the pros and cons of any investment option, we are more likely to make better risk management decisions.

Source: Seeking Alpha

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