What is the Key to Riding out Downturns and Thriving in the Long-Term?

Everyone wants to know what's the key to riding out stock market downturns, and thriving in the long-term. Fortune magazine recently published an article tackling this important question.

Fortune writes that Don Kilbride who manages the $24.6 billion Vanguard Dividend Growth portfolio has an answer: "he's now convinced that dividend growth is the key to riding out bad markets and thriving in the long-term."

Fortune magazine continues to write:

"Investors have treasured dividend growers for ages, of course, and their recent performance has justified the love. Since the beginning of 1999, the S&P 500 Dividend Aristocrats index—made up of companies that have increased their dividends for at least 25 consecutive years—has returned 314%, more than double the broader market. (Even with dividends excluded, they trounce the S&P 500.)"

As a dividend value investor for over 16 years, I've come to appreciate the power of growing dividends. Growing dividends provide an increasing stream of passive income which also protect you from inflation.

Fortune also interviewed Katherine Nixon:

"Katherine Nixon, who oversees $224.5 billion as chief investment officer of Northern Trust Wealth Management, is steering clients into dividend growers like 3M (which boasts 57 years in a row of increases) and Target TGT (43 years). Their stability and reliable payouts reassure shareholders, Nixon says: “When investors are sailing in white water, there’s something very comforting about a buoy.”

The answer to our title question is simple: invest in quality undervalued stocks which pay growing dividends. 

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