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There's no such thing as an investment for all seasons, but dividend-paying stocks come close.When the market rallies, dividend stocks generally post solid but not market-beating returns. If stocks decline, dividend-payers are unlikely to fall as steeply. Part of the reason is that dividend-paying companies are typically mature and large, with steady sources of revenue that hold up when the economy skids. And through good and bad, dividend-payers can be counted on to distribute a portion of their earnings.
What's less well-known is a seasonal performance difference. Dividend-paying stocks typically post better results than non-payers from May through October. The mid-year advantage for dividend stocks is documented in recent research that puts a new spin on the well-known seasonal stock investing advice to "Sell in May and go away." It turns out that selling before summer doesn't necessarily make sense with stocks that pay dividends.
That's how it's been the past two years, when each spring's market gain was wiped out over the summer as investors worried about the European debt crisis and disappointing U.S. economic news. Stocks tumbled, but dividend-paying stocks helped investors limit their losses.
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