Last week, a family friend in his 40s told me that he had sold all of the stocks in his retirement account until the fiscal cliff was figured out. Though it's certainly his prerogative, I couldn't help but think that this approach, repeated over time, would produce poor results, an ulcer, or both.

Over the past couple of weeks, friends and family have asked me: "What should I do with my money, given that we're likely to fall off the fiscal cliff?" To most of these people -- especially the ones who have more than a decade to go before they plan to make any withdrawals from their retirement savings -- my answer has been simple:

Absolutely nothing.

Investing is a game won by long-term investors keeping their sights set on long-term horizons. It's also a game won by those who know they shouldn't be investing with any money they expect to need within the next five years.

Given these parameters, it's self-defeating to make moves based on what may or may not happen over a relatively short "fiscal cliff" time frame. As fellow Fool Anand Chokkavelu recently put it: "If you believe Nobel Prize-winning psychologist Daniel Kahneman, as well as oodles of research on the prediction capabilities of experts, the honest answer is, 'No one has a clue.'"

In fact, on March 9, 2009, fewer than 20% of investors were bullish on stocks, and more than 70% were bearish. As it turned out, most investors were wrong; it was one of the best times ever to be investing. The S&P 500 has returned more than 125% since then, including dividends.

A better way
If we can't know what the future will bring, we needn't get frustrated when it comes to investing. Even beginning investors can sow the seeds for long-term success by simply looking for solid businesses that are easy to understand.

It also doesn't hurt if those companies pay out dividends. Over time, the compounding action of reinvesting dividends makes a huge difference for returns, even if those dividends are taxed at higher rates in the near future.

Below I've listed five companies that most people are automatically familiar with, that offer up nice dividends, and that have continuously increased their dividends despite depressions, wars, fiscal cliffs, and other "end-of-the-world" scenarios.


Current Yield

Consecutive Dividend Increases

Altria (NYSE:MO)


47 years

Proctor & Gamble (NYSE:PG)


59 years

Johnson & Johnson (NYSE:JNJ)


50 years

Coca-Cola (NYSE:KO)


50 years

Exxon-Mobil (NYSE:XOM)


30 years

Source: Yahoo! Finance;

All five of these companies have products that you're bound to encounter on a daily basis, whether you use them or not. They all yield well above the S&P 500 average of 2%, and though nothing is guaranteed, there's a good chance that the dividend will continue to increase no matter the macroeconomic worries of the day.

But here's the rub
There's one key to winning with this approach: patience.

At times, the actual price of your dividend stocks may fall, and you may want to bail. But if the underlying business is still solid, you'll actually get more bang for your dividend buck, because you can buy more shares at the lower price.

Dividends take time -- we're talking decades -- to really show how powerful they can be to a retirement account. Take a look at what the S&P 500 has returned since 1985 both with and without dividends.

^SPX Chart

^SPX data by YCharts.

Of course, a 450% return is nothing to sneeze at, equating to about 6.2% per year. But if you reinvest your dividends, you'll have grown your account by 825% -- or 8.6% per year.

Consider this to put the meaning of "patience" in perspective: If you bought these five stocks today, you'd have to hold them until 2040 to see an effect similar to the chart above. That might sound kind of boring, but "boring" is largely a good quality in investing -- especially when crises like the fiscal cliff threaten to scare investors into selling stocks too early.

If you'd like to dig in a little before getting started, I suggest reading up on the biggest dividend from my list: Altria.

Fool contributor Brian Stoffel owns shares of The Coca-Cola Company and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson and ExxonMobil. Motley Fool newsletter services recommend Johnson & Johnson, The Coca-Cola Company, and The Procter & Gamble Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.