It is impossible to time the market, so investors should not worry about buying at the bottom. What is profitable for the long term is to buy income stocks when the dividend yields reach a target point. Dividend Aristocrat stocks like Coca-Cola (NYSE: KO), ExxonMobil (NYSE: XOM), and Wal-Mart (NYSE: WMT) are all off for 2014.
That allows for investors to buy for the long term with higher yields.
The average dividend yield for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 2 percent. The dividend yield is almost 3 percent for Coca-Cola. ExxonMobil has a dividend yield of 2.80 percent. For Wal-Mart, it is 2.58 percent.
As Dividend Aristocrats, each of these stocks has increased the dividend annually for at least 25 years.
Due to the fall in the share price of each, the dividend yield is now much higher for Coca-Cola, ExxonMobil, and Wal-Mart. If the stock price continues to fall, the dividend yield will rise. That locks a robust dividend yield for the long term from a company that has a history of increasing it that most likely will continue.
It is difficult to find an alternative to a Dividend Aristocrat stock.
To get a bond with a higher yield, it will have an inferior rating. That is where the term “junk bonds” originated. Interestingly enough, Dividend Aristocrats are proven to be excellent companies. If not, they would not be able to continue paying a dividend, least of all raise it annually for more than one-quarter of a century.
As a result, investors should take advantage of pullbacks, declines, and corrections to buy Dividend Aristocrats for the long term. History is on the side of the shareholder. Buying when the stock price has fallen should allow for the shareholder to benefit from a growing income over the long term.