Market volatility got you down? You're not alone, according to the latest research from the Investment Company Institute. The ICI reports that investors withdrew about $30 billion from equity mutual funds in May, the worst monthly outflow since Lehman Brothers filed for bankruptcy protection in the fall of 2008.
Will this decision to "sell in May and go away" came back to haunt investors? Motley Fool analyst Rich Greifner thinks so. Rather than exit stocks completely, Rich advises investors to focus on steady, stable, dividend-paying stocks.
These stocks probably won't soar in a bull market, but stable dividend payers tend not to fall as much when times get tough. And if the stock market does stumble, investors can reinvest their dividends and accumulate shares on the cheap. According to Wharton professor Jeremy Siegel, this reinvestment helps dividend payers beat the market over the long haul.
When selecting dividend payers, Rich recommends that investors focus on companies with strong balance sheets, recurring revenue streams, and copious cash flow. In addition, he loves to see a company with a long history of dividend payments -- and a tendency to raise that dividend over time. To protect your portfolio against a potential market downturn, Rich recommends buying stalwarts such as Coca-Cola
Watch the video here.
More from The Motley Fool
1 Stock I'm Buying More Of in 2018
One airline stock is trading for less than 7 times trailing earnings -- even though the company is likely to achieve double-digit EPS growth in 2018.
Vermont Is Legalizing Marijuana in a Unique Way
No state has ever done this before, and it could pave the way for other states to follow in its footsteps.
This Top Dividend Growth Stock Sees No End in Sight
After growing its already lucrative payout 30% last year, this 4.6% yielder sees at least 20% annual growth for the next five years.