Dividends4Life: 2 Dividend Stocks to Provide Cover Against Market Volatility

When commentators talk about volatility picking up in the market, what they mean is that prices are moving lower. No one ever complains about upside volatility except a handful of short sellers. Volatility is indeed picking up a bit as prices are now down more than 5% from the highs. Before we get too excited, let’s keep in mind that in spite of the triple-digit down days we have seen the past week or two, so far this barely qualifies as a pullback in the market right now.

Defensive, conservative investors in particular should be ready with a list of stocks to buy if the market continues to be weak. For defensive investors, I like to use the Graham number calculation that takes into account both earnings and asset values to measure the worth of a company’s shares. I like to wait until I can buy the stock at about 75% of the Graham valuation. In conservative portfolios I want to own large companies with long track records, reasonable balance sheets and a solid history of paying and raising dividends: Horace Mann Educators Corporation (HMN) is a great example of the type of rock-solid conservative stocks defensive investors should consider if the market keeps falling in the weeks ahead. Private equity might not seem like a great investment for conservative investors but the large PE firms like KKR & Co. L.P. (KKR) fit the bill nicely.

Source: InvestorPlace

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