5 Things You Should Know About Stock Market Corrections

Dividend stocks usually remain stable during a correction

Studies have shown that dividend-paying stocks are less vulnerable to price fluctuations, even during a correction. On the other hand, stocks that do not pay any dividend experience the maximum volatility during this phase.

One of the obvious reasons is that dividend-paying companies are usually more established and have a very positive cash flow. But dividends also set the “floor price” for these stocks. If their price goes down the yield goes up, which makes them an attractive buying opportunity faster than stocks with no dividend.

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