Top 2 dividend stocks I don’t worry about — at all — in a stock market selloff

I own about 40 stocks, and some tend to get beaten up in market selloffs more than others. But for the most part, I don’t worry too much about the underlying businesses of my main holdings. Their share prices may rise and fall, but I am confident that the companies will continue to make money, pay dividends and execute on their growth strategies.

Here are two of my top dividend stocks that I don’t worry about at all during the stock market selloff.

Growth and income no matter what

Real estate income (A -0.02%) it is one of my largest and longest equity positions and for good reason. Not only does the company have a long track record of market-beating total returns, but it has achieved this with lower volatility than S&P 500 and has grown its earnings (and dividends) consistently over time, regardless of what the stock market and economy are doing.

If you’re not familiar with the company, Realty Income is a real estate investment trust that owns approximately 15,500 freestanding commercial properties in the US and Europe, most of which are occupied by retail or service businesses. There are two big reasons why the company has been such a consistent performer over the years:

• Realty Income’s tenants are primarily in businesses that are recession-proof or difficult to disrupt with e-commerce, or both.
• Income property tenants sign long-term leases with annual rent increases included, and tenants are responsible for taxes, insurance and most maintenance costs.

The proof is in the performance. Real Estate Income has generated an annualized total return of 13.5% in the 30 years since it was listed on the NYSE and has grown its payout for 107 consecutive quarters in a variety of economic climates. With a yield of 5.2% and a share price that is still more than 25% below all-time highs, Venitul Realty could be worth a look for any long-term investor.

An essential business with a long-term focus

The stocks I worry about the least are the ones that sell things to people needand Markel (MKL 0.88%) is definitely on the list. At its core, Markel is an insurance company, providing specialist insurance and reinsurance products. There are many applications of specialty insurance, and as a personal example, when I needed umbrella insurance to cover multiple rental properties, Markel is the company that wrote the policy.

Markel is also unique among insurance companies in that it invests its excess capital in two ways. First, it invests in common stocks and has a portfolio of billions of dollars. A market sale gives the company the ability to put money to work at discounted prices. Markel also invests in earlier-stage businesses through its Markel Ventures business, and this has the potential to create investment gains for the company.

Markel trades for about 17 times earnings estimates, which isn’t exactly cheap, but it’s an attractive price to pay for this unique insurer. But if the stock were to drop during a sale, I would like to add more shares to the sale.

Your game log during a market sale

When a stock market sell-off hits, the most important thing to avoid is overreacting and hitting the buy or sell buttons too quickly. I often tell people on days when the market is down (or up) that “today is a great day to do it nothing.” Trying to time the market is a losing battle, and reacting quickly to general market movements rarely works out favorably.

When the dust settles and prices are still falling, however, it can be a great time to pick up great bargains at a discount. The two stocks I’ve discussed here are just a few examples I’d like to add to if stocks were to suddenly drop 10% or more without any change in the performance of the businesses themselves.