Dividend stocks are an essential component of any portfolio. Not only do they offer passive, effortless income every quarter, but they also act as a financial buffer against market volatility. This is especially true this year after the Dow Jones Industrial Average hit a two-year low on Feb. 11.
That's why we've picked one of the best dividend stocks to buy this year.
But it's not just about that passive income…
Another reason we're recommending dividend stocks is because they've been outperforming the broader market in 2016. The Dow Jones U.S. Select Dividend Index, which follows 100 high-yielding companies, has gained 7.8% so far in 2016. That smashes the Dow Jones Industrial Average's 1% gain.
The dividend stock index's momentum is mostly thanks to the Dow Jones' 11% plunge during the first six weeks of the year. According to Money Morning Chief Investment Strategist Keith Fitz-Gerald – a market expert and professional trader with more than three decades of experience – stocks with passive income streams are more attractive during periods of volatility.
"Dividend-paying stocks tend to be more stable than their non-dividend paying brethren – particularly during rocky stock markets," Fitz-Gerald said during the 2008 financial crisis.
Let's look closer this stock...
Source: Money Morning