How Dividend Stocks Fare When Equities Fall

Despite enthusiasm for Alibaba and Apple and other prominent names, Wall Street is abuzz with warnings that a bear market is coming. Although the rational approach to such talk is to maintain appropriate asset allocations, many advisors are likely to hear from worried clients. It may be helpful to point out that dividend-paying stocks -- and the mutual funds and ETFs that concentrate on them – have historically continued dividend payments. Indeed, many increased when stock prices have fallen.

Other than in 2008 and 2009, the worst ratios were in 1991 (when the positive/negative ratio was 3.34), 1982 (3.75), 1970 (3.86) and 1958 (2.73). And what were the markets doing as companies cut or omitted dividends in record numbers? The year 1958 was bracketed by a bull market that began in late October 1957 and ran through mid-December 1961. Likewise, 1991 was inside a bull market that ran for almost 150 months, from early December 1987 through late March 2000 -- during which the S&P 500 rose by more than 582%.

Source: Financial Planning

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