The third quarter of 2015 was a bad one for the market. The S&P 500 fell 7%, its worst performance in four years. In the third quarter of 2011, the S&P 500 dropped 14%. It then rallied in the fourth quarter to finish the year exactly where it started. If you include dividends, you made a few percentage points.
And since that drop in 2011, the market has gone on to climb 99%. So the recent decline in stock prices doesn't automatically mean you're destined to move in with your children and take a job bagging groceries to pay the bills.
On the other hand, just because the market doubled the last time there was a significant slide is no guarantee it will happen again. At some point, maybe even in the near future, a bear market will rear its ugly head.
And when it does, you must be prepared. Not by selling everything you have, but by owning a few stocks that should hold up well in a rough market.
Bearing the Bear Market
Receiving a nice dividend yield will help you during the bad times. Not only will your investments spin off income, but that income also will be perceived as valuable by other investors and will help the stock hold up better than many that aren't dividend payers.
And during bear markets, the total returns of dividend payers are typically better than those of their peers that don't pay dividends.
Below are three stocks with attractive valuations, increasing cash flow and a history of dividend growth – stocks that will help your portfolio weather a bear market and enable you to sleep at night.
