Every bear market is different. They affect different sector differently. You never know what sectors are going to hit ahead of time. That is why, even with dividend growth stocks, you need to have stocks in different sectors.
What I have found in bear markets is that my dividend increases overall go down. So far, I have done quite well. The dividend growth to the end of July for my trading account is up 5.8% over the dividends I collected last year. This is the account from which I get dividends I use to live on. My overall dividend increase has increased by 8.7%. My different accounts have different outcomes as far as different increases go.
I thought I would write this blog entry because a recent article I read from Advice from Investors. The article in the Daily Buy and Sell Adviser talks about the bear market produced by the pandemic and talks about it pushing some companies into bankruptcy. This also happens in every bear market. It talks about Survivors having eliminated or reduced their dividends and some of their key stocks were among them. This is as expected.
However, it is the next paragraph I take exception to where it says it is hard for investors to earn enough income without selling and depleting their capital. If you have a portfolio of stocks from different sectors, this should not be a problem. I have never had this problem.
Although to ensure that I have no problems, I have a reserve fund in a bank for any emergencies or if I need it to supplement my income if necessary. However, I must admit that so far, I have used to fund some dental work, but mostly for holidays. (The holidays were unexpected, but I had a chance to go somewhere great with a friend or friends and could take the opportunity,)
The thing that I have noted with this bear market is that the dividend growth companies (in Canada on the Aristocrat list) that have cut or suspended their dividends are rare. The Blogger Stock Trades Canada has on his site a list of Canadian stocks that have cut their dividends. His list notes whether or not the stock was part of the Aristocrat list and there are few which answer this question with a yes.
On my other blog I wrote yesterday about Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more. Next, I will write about Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more on Wednesday, September 23, 2020 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.