I’m buying dividend stocks ahead of the next bull market

I am planning my retirement by investing in the above FTSE 100 dividend-paying stocks. I will reinvest my dividends today, and into income when I finally retire. Sounds like a solid plan to me.

Naturally, there are dangers. Stock prices may fall. Dividends can be deducted. The company could go out of business. I think the reward is far greater than this risk, but I swing the odds in my favor by doing three things.

The bull run will come

The first is to build a diversified portfolio of at least twelve stocks, in various sectors of the FTSE 100. That way if one or two fall, hopefully others will compensate by holding the company or climbing. Investing is cyclical. With luck, most of my stocks will enjoy a day in the sun at some point.

The second way I protect myself is to only buy stocks that I plan to hold for at least five to 10 years, and ideally decades. By taking that long-term view, I can sit through the bad times and wait for the good ones.

Right now, there is a lot of bad news around. This is the third way I swing it in favor. I love buying stocks when they’re cheap, especially when it’s no fault of my own, but because the market is selling off.

The banking crisis has given me another opportunity to shop for cheap stocks, as the FTSE 100 has fallen from a peak of 8,000 to around 7,450 at the time of writing. By buying shares at a low entry point, then continuing for the long term, with luck I can turbo-charge the total return.

I went shopping last October, when the FTSE 100 was trading around the 6,000 mark, buying Lloyds Banking Group, persimmonand Rio Tinto. Until the sell-off, I felt like smart clogs, because all the stock prices quickly went up by 10% to 20%. They began to give up a lot of profits, which stocks sometimes do. However, because I bought diamonds in the first place, I still went up in all my trades.

I bide my time

I bought it too Rolls-Royce, although it does not currently pay dividends. I thought it was too cheap to ignore, and at some point, Management would hopefully resume shareholder payments. I was lucky – the stock is up 77% since then.

persimmon and Rio Tinto There have been two dividend cuts since I bought them, but I’m not surprised. They yield 20% and 10%. Today, they yield 4.56% and 7.75%. I still like that one.

Last week, I bought an asset manager M&G, which yields 11.43% of the time. Now I’m crossing my fingers and hoping it’s sustainable. I don’t know how long today’s buying opportunity will last, but I do know that at some point, the stock market will turn around and we will be in the next bull run. I just don’t know when. No one does.

History shows that markets always recover, given time. I like buying dividend stocks today. With luck, I’ll be even happier when the next bull market takes place.