With the major stock indexes now in correction territory, there are fears that the market is headed for a full-blown bear market drop of 25% or more. The safe way out is to go to cash, but if you guess wrong you will miss out on further gains as so many people did after the 2008/2009 crash.
Cash also doesn’t earn much. While you may be fearful about the next bear market, it’s likely impossible you will be able to time getting out in time to avoid much of the decline. Another way to prepare for the next bear is to buy shares of stocks that will do better than the market through the next big decline.
It is a fact that in a bear market share prices of almost all stocks will drop. Some a lot and others not so much. My strategy for getting through the bear and survive until the next bull is to own higher yield, dividend paying stocks that will not cut the dividend through the downturn. These stocks should not fall as far. Also, I can take the dividends to average down my share price through the market downturn. Coming out the other side I will have a lower average cost of shares and a much larger dividend income stream. That’s a win-win strategy to get through a bear market.