Dividend yielding stocks for the Coming Bear Market

The experts are already talking about the “coming” bear market!! Is it imminent? And if it is – what are the ways to keep your investments safe? Jeremy Siegel – the Wharton Finance professor has recently been a big advocate of the dividend yielding stocks as the BEST way to make money over the long run – which is sort of counter to Buffett’s philosophy of re-investing the money to lower the tax incidence over the years.

However, Siegel and Buffett must count as two of the MOST followed investment experts in the world today!

Here is Siegel’s take on what to do in the coming years:

Dividend-paying stocks act, in Siegel’s words, as “bear-market protectors” and “return accelerators” during down markets:

* Dividend yield is a huge factor when it comes to actual returns. The yield is simply the dividend per share divided by the price, so a $100 stock that pays $2 in yearly dividends has a yield of 2%. When stock prices fall, yields obviously rise as long as companies don’t cut their dividends at a greater rate than the price drop.

* When those dividends are reinvested, they purchase more and more shares at lower prices during a bear market. These extra shares act as a bear-market protector.

* Then, when share prices reverse, the extra shares act as a return accelerator and rocket total returns higher.