During wild market swings, it’s those slow-growing, dividend paying stocks that will protect your portfolio from plummeting. Defensive stocks, as they’re often called, are big players like Coca-Cola or McDonald’s—companies that have a lot of customers in sectors that aren’t as dependent on good economic conditions to survive. Grocery stores, for example, are solid buys in unstable markets—people always need to eat. Look at companies that pay a dividend so income can still flow into a portfolio even if stock prices are down. “When people distrust the market, you want any earnings given back to you in cash,” says Maria Holowinsky, executive vice-president of Edmonton-based Adroit Investments. “If you ask for an ongoing cash payment, you can put that money in your pocket and use it as you see fit.” Choose companies that increase their dividends year after year. That suggests the business is strong and making enough money that it can give some of it back to investors.
(Research, editorial and spiritual support provided by Bryan Borzykowski; “artistic” support by Trevor Melanson )