A strategy that helps protect your retirement

The stock market’s recent slide has troubled many investors. That’s understandable. But it’s important to remember that there are prospects for growth during any downturn. Today, I want to talk about those opportunities and a related rule of thumb on owning stocks.

When the stock market tumbles, dividend yields for a wide array of companies tend to rise. That’s because when stocks sell off and share prices fall, dividends (typically) remain the same, pushing a stock’s dividend percentage payout higher.

Think about this example. A stock trades at $50 a share and pays a dividend of $2 per share. In this situation, your dividend yield (which, for a refresher, is the dividend divided by share price as a percentage) is 4 percent. Now, say that same stock drops to $40 a share while still kicking off the same $2 per share dividend. Now that same stock’s dividend yield is 5 percent. So as painful as a market sell-off can be, there can be a silver lining.

Now, for those of you wondering if you’re over-invested in stocks — or, heck, whether you should own them at all in the current market — I want to talk about a guideline that you might find helpful in your decision-making.

I call it the 15/50 Stock Rule. Compared to investment vehicles like bonds, stocks are higher risk, meaning they have more potential upside and downside. We stomach this