Dividends, Investing

What is the Key to Riding out Downturns and Thriving in the Long-Term?

By Kanwal Sarai
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Save DollarsEveryone wants to know what's the key to riding out stock market downturns, and thriving in the long-term. Fortune magazine recently published an article tackling this important question.

Fortune writes that Don Kilbride who manages the $24.6 billion Vanguard Dividend Growth portfolio has an answer: "he's now convinced that dividend growth is the key to riding out bad markets and thriving in the long-term."

Fortune magazine continues to write:

"Investors have treasured dividend growers for ages, of course, and their recent performance has justified the love. Since the beginning of 1999, the S&P 500 Dividend Aristocrats index—made up of companies that have increased their dividends for at least 25 consecutive years—has returned 314%, more than double the broader market. (Even with dividends excluded, they trounce the S&P 500.)"

As a dividend value investor for over 16 years, I've come to appreciate the power of growing dividends. Growing dividends provide an increasing stream of passive income which also protect you from inflation.

Fortune also interviewed Katherine Nixon:

"Katherine Nixon, who oversees $224.5 billion as chief investment officer of Northern Trust Wealth Management, is steering clients into dividend growers like 3M (which boasts 57 years in a row of increases) and Target TGT (43 years). Their stability and reliable payouts reassure shareholders, Nixon says: “When investors are sailing in white water, there’s something very comforting about a buoy.”

The answer to our title question is simple: invest in quality undervalued stocks which pay growing dividends

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  • Scott

    Great advice! Part of me kind of wants this long bull market to run its course and for the market to have some correction. It would be nice to be able to pick up some good names at great prices.

    I had been invested in the market during the tech crash in the late 90s but then actually sold prior to 2008 recession in order to pay for school. During the tech crash I was mostly invested in mutual funds, including a few small/mid cap tech oriented ones that obviously struggled. In fact, I just recently used up the last of that capital loss carryover!

    My current portfolio was begun anew in 2011 and, so far, has only experienced a sustained bull market. While it is nice to see all the green in the portfolio, it will be insightful to see how the dividend payers fare. I’m not expecting too many cuts and likely most will continue to offer small increases. My only hope is that I’ll have enough cash on hand in order to shop around at that time.

    You have an interesting site. I’ll definitely be taking a longer look around!!


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