Enterprising Investor Forum

Thought of the Day Friday, July 27, 2007

Following up from our last post, we thought that this quote could be quite interesting for our readers. Jeremy Siegel says “Bear markets are not only painful episodes that investors must endure; they are also an integral reason why investors who reinvest dividends experience sharply higher returns.”

And speaking of dividends, remember that when markets are suffering, dividend-paying stocks start to look a bit sexier. No matter what happens in the markets, consumers will still have to buy toothpaste, toilet paper, saving cream, milk, etc… That’s why investors should start to take a closer look at long established companies with strong balance sheets, a history of dividend increase and that offer products that consumers will always need. Furthermore, companies with strong international exposure will help hedge against the US situation: Kellogg (K) is one example.