Dividend-paying stocks provide a built-in return, are defensive in down-markets and thrive in up-markets
The strong balance sheet and high profitability of a dividend-paying company can act as a hedge through a period of market volatility. Companies that pay a sustainable and growing dividends, have proven to be more resilient in down markets and have shown that they can keep up with the market during periods of market upturns as their earnings grow to support the increasing dividends. Over the last two major market downturns and subsequent rebounds strong dividend paying companies were better at preserving capital on the downturns and also fully participated during market up-turns.