Let's be honest: Given the market movements we've been enduring, who wouldn't panic?

In a single week in mid-October, the Dow Jones Industrial Average posted both its highest point increase ever and its lowest one, up 936 points on a Monday and down 733 points two days later. Just the week before, the Dow dropped a whopping 18.2%. Last week the Dow dropped nearly 1,000 points in two days before recovering enough to finish the week down "only" 5%.

When you watch those dips and drops reflected in your portfolio, well, it's hard not to sweat.

Keep your perspective
But even though the daily market news is upsetting, that doesn't mean you have to panic. Take a deep breath, and remember these truths.

  • Until you sell, these are paper losses only. They only become real if you decide to get out of your investments -- and there are only a few reasons you should sell. So hang in there.
  • Measure your portfolio's performance based on when you bought your investments and what you paid for them -- not how much you've lost from the top.
  • Even if you're on the cusp of retirement, you have decades of investing ahead of you -- time not only for the market to recover, but for the market to continue to produce strong returns. Only keep out of the market money you'll need in the next five years.
  • In exchange for the higher average returns the market produces, you have to endure some volatility.

Fend off panic
But just because we have to endure some volatility doesn't mean we can't invest to reduce our collective tendency to panic. One way to do that is to invest in healthy, growing dividend payers.

Companies that have a history of regularly and significantly hiking their dividends not only are less likely to go under, but they tend to outperform the broader market. And even when stocks are getting pummeled across the board, these companies will keep paying you, usually quarterly, no matter what the Dow or the economy is doing.

Dividend payers may have a reputation as consolation prizes for the chicken-hearted, but they really can offer you the best returns possible -- and that helps you sleep at night.

Screen for gold
Just any dividend payer won't do, of course -- you need to find the ones that are healthy and growing. I usually start by screening for market capitalizations of at least $2 billion, net profit margins of at least 10%, dividend yields of at least 3%, and dividend growth rates of at least 10% over the past five years. Here are a few that meet those criteria.


Dividend Yield

5-Year Div. Growth

Net Profit Margin

Coca-Cola (NYSE:KO)




Harley-Davidson (NYSE:HOG)




PepsiCo (NYSE:PEP)




McDonald's (NYSE:MCD)




American Express (NYSE:AXP)




Automatic Data Processing (NYSE:ADP)








Don't rush out and buy shares of any of these companies without doing some further research, of course. Make sure the firms are enjoying growing income and revenue, that debt levels are low or manageable, that profit margins are robust and ideally growing, that management is capable, and that the companies have competitive advantages and rosy futures.

But companies like these -- whose healthy and growing dividends testify to the healthy, growing company behind them -- will help you invest without panic.

The Foolish bottom line
You don't have to break into a cold sweat every time you look at your portfolio -- even in a market like this one. Stock it with a bunch of healthy dividend payers and even throughout market downturns, you'll be making real money every year -- no matter what your paper gains or losses look like.

If you'd like to see which dividend payers our Motley Fool Income Investor service is recommending right now, considering taking advantage of our 30-day free trial. You'll get access to all past issues, as well as our recommendations for new money now. Our recommendations are currently beating the market on average by nearly four percentage points. Just click here to get started -- there's no obligation to subscribe.

Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola and McDonald's. Coca-Cola, Intel, and American Express are Motley Fool Inside Value picks. The Fool owns shares of American Express. The Motley Fool is Fools writing for Fools.