It has been a tough year 2018 to make money in the stock markets. Many stocks have performed much worse than the overall market.
Here are some stats from the S&P500:
250 stocks were down 20% or more from their all-time closing highs.
162 were down at least 30% from their all-time highs.
113 were down at least 40% from their all-time highs.
69 were down at least 50% from their all-time highs.
But there is group of stocks that is up more than 5% in 2018. These S&P 500 companies boast long track records of increasing their dividends year after year regardless of the stock market performance and swings. They are high-quality companies that enjoy durable competitive advantages and are led by shareholder-friendly management teams.
Let’s take a look at these kind of stocks:
On first site they look boring. They include 3M (NYSE: MMM), Stanley Black & Decker Inc. (NYSE: SWK) and Cincinnati Financial Corporation (Nasdaq: CINF). None of these companies will make your pulse race during a go-go bull market.
They are mature, slow-growing firms also tend to trade at lower valuations than the super exciting Netflix, Amazons and Apple.
They also pay out a larger share of their earnings as dividends than their faster-growing counterparts.
During periods of market turmoil, these stocks really shine.
During the global financial crisis of 2008, the S&P 500 was down 37%. But these dividend paying stocks only dropped 22%. They have been equally robust during the recent market sell-off. Over the past three months, the S&P 500 has fallen about 10%. These stocks only 7%. These dividend paying stocks tend to capture almost all of the upside of the S&P 500, while suffering only about 70% of the market’s drawdowns.
If you want to go defensive in a market of turmoil then switch into these strong dividend payers!