AFLAC Incorporated (AFL), Johnson & Johnson (JNJ): To Protect Yourself Against Falling Markets, Consider Dollar Cost Averaging

Fellow Dow component Johnson & Johnson (NYSE:JNJ) is the gold standard of dividend payers. In April, Johnson & Johnson (NYSE:JNJ) provided investors with a 7% dividend increase to its current level of $2.44 per share, yielding 3.10% at recent prices. This marked the 50^th consecutive year of a dividend increase, an enviable dividend track record most companies would love to have.

Last but not least, supplemental life and health insurance provider AFLAC Incorporated (NYSE:AFL) has an impressive dividend history of its own.

Although you can probably recognize the AFLAC Incorporated (NYSE:AFL) duck when you see it, what you might not know is that the vast majority of the company’s business is done far outside the United States. Interestingly, AFLAC Incorporated (NYSE:AFL) derived 78% of its revenue from Japan in 2012.

That being said, AFLAC Incorporated (NYSE:AFL) is a wonderfully managed company that remains committed to returning cash to shareholders. In 2012, AFLAC Incorporated (NYSE:AFL) raised its dividend for the 30^th consecutive year, and the company plans to purchase $400 to $600 million of its shares in 2013. At recent prices, the stock yields approximately 2.50%.

The Foolish conclusion

Dollar-cost averaging is one of the best ways to consistently invest in a way that manages risk and builds wealth for the future. Whereas some investors may be tempted into actively trading their accounts, resulting in high portfolio turnover, there are many drawbacks to this. In short, taxes and commissions serve no purpose other than to take a big bite out of a portfolio’s rate of return over time.

The dollar-cost averaging strategy essentially times the market for you. A consistent investment, of say $500 per month into stocks, will buy more shares when the market is low and fewer shares when the market is high. Buy-and-hold, Foolish investors who understand the power of compounding interest over long periods of time should seriously consider dollar cost averaging into stocks, particularly the three blue chips presented here.

Robert Ciura owns shares of McDonald’s. The Motley Fool recommends Aflac, Johnson & Johnson, and McDonald’s. The Motley Fool owns shares of Johnson & Johnson and McDonald’s. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article To Protect Yourself Against Falling Markets, Consider Dollar Cost Averaging originally appeared on Fool.com is written by Robert Ciura.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.