Most investors were scared from the severe drops in global stock markets last week, caused by the freezing of the debt markets and the global recession fears which the tightening of the credit markets might cause. Most stocks have suffered double digit percentage losses since the start of the year, even after yesterdays record rally. It’s no place to panic however. Historically the average duration of bear markets has been about 18 months since the great depression. Since 1956 however the average duration of bear markets has been about fourteen months.
It has taken S&P 500 about 5.2 years on average to recover from to above its bear market highs since 1929. If we check the same parameter starting in 1956 the average recovery time from a bear market comes out to 2.8 years on average.
I think that now is a perfect time to start looking for bargains and then dollar cost average in them. I would then consider ignoring most pundits out there who claim that this time it is different and that the world is coming to an end and instead focus on companies which have survived many recessions and bear markets while increasing their earnings and dividends to shareholders for many years. One great list to start with is the dividend aristocrats maintained by Standard and Poors.
I selected the following dividend aristocrat stocks which fit these criteria:
1. P/E ratio is under 20
2. Dividend Payout Ratio is under 50%
3. Dividend yield is at least 2%
4. 5 year dividend growth rate is at least 6%
I came out with the following list. You could also open the list from this link.
It is in times when gurus claim that fundamentals don’t matter any more when the astute investor will find great value stocks with decent moats at fire sale prices. Sometimes the market brings you fat pitches and it’s up to you to swing or not. As a dividend value investor however I am perfectly ok if the stock market unchanged or lower for several months or even years as I am certain that most dividend aristocrats will keep paying dividends and even better- increase them. Thus I will continue getting a return on my investment no matter what.
Full Disclosure: Long JNJ, PG, ADM, ADP, EMR, FDO, GWW, JNJ, MHP, MMM, MTB , PEP, PG, SHW, STT, XOM
- Average Durations of Previous Bear Markets
- Why do I like Dividend Aristocrats?
- Dollar Cost Averaging
- My Dividend Growth Plan - Strategy
As we all know, the stock market is at an all time high. That is despite the fact that earnings for the US corporations have been flat for ...
As part of my portfolio monitoring process , I evaluate the list of dividend increases every week. It is helpful to monitor how my investmen...
The ultimate goals of everyone reading this site is to retire wealthy and to stay retired. Financial independence provides flexibility, fre...
Right now, many investors are sitting on huge unrealized gains in the companies they have bought years ago. I am in those shoes too. However...
Last week I shared with you a list of nine dividend champions , which I believed were attractively valued. Today I am sharing with you a few...
After observing market behavior for 20 years, I have come to the conclusion that many investors do not have a clue about how to make money i...
It seems like international investing is all the rage these days. It seems like everywhere I look, someone is recommending investors to add ...
I do not like it, when my dividend paying companies are acquisition targets. Last week, shares of Hershey (HSY) increased to an all-time ...
General Mills, Inc. (GIS) manufactures and markets branded consumer foods in the United States and internationally. It also supplies branded...
Many of you are aware that I have been a big fan of tax-deferred investing over the past three – four years. After my awakening moment in l...