>>> Economical events can greatly alter your equation. <<<
I suppose you are correct, but here's how I am looking at it.
I am buying companies I don't want to sell. I want companies that have a long history of not only paying dividends, but raise them every year.
I don't want to liquidate anything to meet income needs later if life. I want to enjoy holding my positions and allowing the dividends to meet my income needs.
With this is mind, companies like PG, KO, ABT and JNJ have already been through the worst of economic times in our generation. They have endured the savings and loan crisis, the tech crash and recession of 2001, Presidential assassination attempts, 9/11, and the financial crash of 2008 and 2009, the worst of economic times since the Great Depression and not only continued paying dividends, but increased them.
Share price took a hit in each of those scenarios, but dividends aren't paid based on share price, they are based on the number of shares you own. So even in poor economic times, shares owners got a pay raise.
Regardless of the economy, people are going to pay their light bill. They are going to shower, shave, clean and wipe. They are going to eat. And since people are going to continue doing those things, even if they lose their job, these companies are going to continue raising cash and as long as they are raising cash, they have shown a history of sharing that cash with share owners.
And as long as a company continues to pay their dividend and raise it, that company will create value and that value will eventually attract new share owners which will make share price rebound. Every economic crisis of our time has shown that. You just have to accept the volatility that comes with that. That's the reason I think it's important to buy high quality companies.
Is there a chance it may not happen again? Sure, but I like my odds. |
