Dividend stock investing has proved itself a superior strategy for creating sustainable wealth over the long term. Studies show that income-generating stocks in the S&P 500 have never produced losses for investors, even during the 1930s when stocks lost 39% of their value, and the “lost decade” of the 2000s, when they were essentially flat.
Yet individual dividend stocks can still lose value in any particular year. That’s why you want to own a basket of dividend stocks that can protect your downside over time. One of the best ways to do that is by buying an exchange-traded fund (ETF) that focuses on both income and capital appreciation. They will provide a buffer against the worst of times, providing you with regular income to see you through, and allow you to enjoy the benefits of the turnaround that will follow.
That’s why, when everyone is running around with their hair on fire selling stocks, you will want to own this ETF.
This post originally appeared at 24/7 Wall St.