A dividend is the payment that a company distributes to its shareholders as a percent of earnings. Management can decide whether to pay a dividend, how much it is, and the frequency of payments. Dividends are often distributed quarterly and are quoted as the amount of dividend per share. Companies that issue such payments are called dividend paying stocks and are attractive for investors seeking income in addition to capital appreciation.

The stock market continues to be in correction mode and so are gold and oil prices. But, the trading action in the equity market isn’t that bad at all; the down days aren’t that pronounced and we’re seeing solid rebound days, which signals that buyers are definitely out there. Daily investor sentiment is no doubt affected by developments in the eurozone and I think it’s fair to expect things to get worse regarding the sovereign debt crisis. European policymakers are likely to apply another round of “patches” to the problem; but, next year, I think the eurozone will be in for some real turmoil.

This combined with the usual geopolitical concerns and slow growth in the U.S. economy means that there is no rush for stock market investors to take action. It’s like the domestic stock market is in some sort of holding pattern, waiting for a shock to occur. Regardless, investment risk remains very high.

The S&P 500 Index is now in danger of giving up all its gain since the beginning of the year. I suspect we’ll get some consolidation around 1,300 on the index, but if this breaks, we’re back to where we started. The stock market was due for a correction after this year’s solid price move. The problems in the eurozone are now compounding the pullback.

It’s my expectation that second-quarter earnings season will be just as solid as the first quarter. The stock market, however, just might look right past the numbers if problems in the eurozone get worse. It’s the uncertainty of it all that is keeping domestic investors from betting on domestic fundamentals, which are better than those in the eurozone. I repeat my view that stock market investors should be watching their favorite large-cap, dividend paying stocks closely for new entry points. I think the correction has further legs, but price-to-earnings ratios continue to be fair.

I’ve learned over the years that anything can happen in capital markets and that, very often, price extremes are the norm. With the stock market being emotionally driven (just like the rest of the world), you have to expect the market to overdo the underlying fundamentals. I suspect that it won’t be too long before we get a small rally in the share prices. I don’t expect any major shock like a debt default in the eurozone to all of a sudden just happen. My best guess is that we’ll get a slow but continuous deterioration of investor confidence in eurozone bonds, which will precipitate a political crisis before a debt default or currency breakup. Institutional investors are just about done buying the bonds of weaker eurozone countries.

We’re in for a lot of change over the next 18 months and it isn’t going to be pretty. The stock market is rightly stalled over all the eurozone uncertainty, while domestic fundamentals slowly improve. If there was one industry where I’d like to see further price correction, it’s that of railroad stocks. (See U.S. Economy: What Freight Haulers Are Saying About It.) This is one sector where companies keep saying that the operating environment is getting better and, to be frank, I’m becoming less enthused about investing in businesses that operate outside of North America.

Unless we get a major shock like war or something related to the sovereign debt crisis in Europe, I don’t think the stock market is going to experience a lot of further downside. Stock prices might drift and then trade range-bound for a couple more months, but stock market valuations are fair and this provides a lot of cushion.

I do think there is more downside potential in gold, silver and oil prices and it’s not just related to slower growth in the global economy. A lot of the price weakness in these commodities is related to strength in the U.S. dollar, which experiences renewed enthusiasm every time there’s an uncertain development in the eurozone.

There remains, in my view, an underlying strength to the stock market at this time. Institutional investors want to be buyers in this market; they only need a reason to do so. I fully expect that large-cap companies that pay dividends will continue to be the market leaders going into 2013, because, in a slow growth environment, dividends income is crucial. I think it’s fair to conclude that expectations for capital gains are fairly low among all stock market investors, so dividends become the only way to beat the inflation rate.

Because we’re now in the lull between earnings seasons, increased dividends announcements are reduced. I think we’ll get another round, however, during second-quarter earnings season, largely because companies can and want to keep shareholders happy. The cash hoard among most large-cap companies remains substantial.

When share prices go down, yields for dividends go up of course. Most of the stock market’s leaders haven’t actually pulled back in price to a very large degree and this contributes to my view that there is solid underlying strength in this stock market. (See Stock Market Correction’s Here—Put Dividend Paying Stocks on Your Radar Screen.) And the fact that stocks are fairly valued suggests to me that further downside will be modest.

Practically, the only thing that equity investors can really count on in this market is dividends income. Things could blow up in Europe, China’s economy could slow even further, or there could be another war in the Middle East. In any scenario I consider, I just don’t see GDP growth accelerating very much. This is why I’m so pro-dividends. Dividends income is the best bet for new investible money in the age of austerity. Everything else, like gold or oil stocks, you have to get timing right in order to make money. With large-cap dividend paying stocks, all you need is the patience.

The current stock market correction has some legs, so be prepared for more downside. We’ve got gold below $1,600 an ounce and oil solidly below $100.00 a barrel—this is a broad-based market correction in investable assets and it will likely linger for a while.

The stock market began to roll over naturally after the majority of first-quarter earnings were reported. We were due for a market correction just based on the market’s strong performance from the beginning of the year. Then, the most recent catalyst was the political uncertainty in the eurozone and the continuing worries regarding European sovereign debt. The timing could not have been more perfect. Going forward, I wouldn’t be surprised at all if stock market trading action is difficult right until the end of the summer. Then, it’s election fever. The old adage, “Sell in May and go away,” looks like a winner this year.

In terms of investment strategy, now isn’t the time to be a buyer. I think stock market investors should wait for the current market correction to play itself out, while watching for good corporate news and dividend increases. The spot price of gold is also in correction mode and could be soft for the next couple of quarters, perhaps even into next year. For stock market speculators, I continue, however, to like mining stocks. For the majority of an equity portfolio, higher dividend paying stocks are the only way to go in a slow growth environment.

Investor sentiment isn’t all that bad at this time. The stock market needed a market correction and is gyrating on Europe, but the domestic outlook is still decent and stocks are not expensive. Some industries are doing much better than others, but this is the nature of economic recovery. It takes a lot of time for the system to balance itself out after the mortgage debt-induced financial crisis.

So, if you’re a stock market investor, you need a lot of patience. Most U.S. corporations said in their first-quarter financial reports that they expect business to get better in the bottom half of the year. The fundamentals, in terms of valuations and corporate earnings, are actually pretty decent for the stock market. But, the marketplace is now in fear mode and the biggest problem is all the uncertainty. We’ll see how long this market correction lasts. Anything is possible these days.

I would add that the gift of a material price correction is the opportunity to invest in good companies at a more attractive price. Equally important is the falling price for oil, which has an almost immediate impact on disposable income and corporate earnings. The financial world isn’t coming to an end (at least not quite yet); it’s only going through a well-deserved market correction. There is an underlying strength to the stock market and that’s because of valuations. (See The Best Performing Index Over the Last 12 Years.) Share prices could be soft for the next several months, so retail investors will likely keep to the sidelines. I expect institutional investors to keep buying higher dividend paying stocks throughout the year. I also expect increased dividend announcements right into 2013.

This is the correction we’ve been expecting and it’s affecting stocks as well as commodities. The stock market has been due for a correction after a solid first-quarter earnings season and, because share prices moved so strongly since the beginning of the year. It doesn’t really matter what the catalyst is for the correction; it is well-deserved and a healthy development in my view.

I think the S&P 500 Index is vulnerable now to the 1,300 level and, if it gets there, this would be a meaningful correction and a good buying opportunity for higher dividend paying, large-cap companies. Generally speaking, I think we’re in a time now where the stock market will be more apt to reward income over growth. Large-cap, dividend paying stocks have been leading the stock market since last October and I think this trend will continue right into 2013.

Along with large-cap stocks, both smaller companies and commodities are also experiencing a pullback. Growth concerns in the global economy are real and whether it’s related to price inflation in China or sovereign debt problems in Europe, the new normal is slower economic growth rates, especially among mature economies.

I don’t see any reason why the U.S. stock market can’t reaccelerate this year, especially as we are likely to see sporadic improvement in the economic news. And, while the outlook for corporate earnings isn’t robust, it’s still solid and stock market valuations are reasonable. Investment risk remains high for all equities, but it’s been like this since the financial crisis.

I think that big corporations are keeping earnings expectations purposefully low, in order to outperform come earnings season. (See Earnings Reflect Expectations—the Stock Market Is Fairly Valued.) It’s a way of providing shareholders with “good news” in a slow growth environment. One thing we are getting though is increased dividends and this is great news if you like dividends income with the potential for capital gains. Intel Corporation (NASDAQ/INTC) was the latest brand-name company to up its dividends payment to shareholders and, with so much cash building up on corporate balance sheets, increasing dividends news should continue throughout the year.

As I’ve said, this stock market correction is healthy and well-deserved. The stock market is fairly valued and this gives us a lot of breathing room for a pullback. If I were an equity investor looking for new positions this year, I’d wait until the correction plays itself out and I’d be watching my favorite dividend paying stocks for a good entry point. I still like gold investments for speculators; but, to me, dividends are king in this kind of market.

I’d like to see a stock market correction so income investors could buy good dividend paying stocks at fair prices. I’m not rooting for disaster, of course, and I’m not fond of short selling. I just think that, if the stock market pulled back a normal three percent to five percent from its current level, it would make for a very good entry point for new positions.

Although the stock market has done very well since the beginning of the year, dividend yields have stayed about the same. This is due to dividends increases and, as expected, the news for income investors has been good and widespread among a number of industries. Corporations would still prefer to return excess cash in the form of dividends or share buybacks than invest in new plant, equipment and employees. It’s an easy strategy in an uncertain world and, at the end of the day, it keeps shareholders happy.

I expect more increased dividends announcements in the second quarter this year. I knew we were going to get lots of this in the first quarter (see Expect Big Increases to Dividends Over The Next Few Quarters), but when the second quarter ends, company managements have a good sense as to how the rest of the year is going to go. Increased dividends announcements during the first quarter resulted in solid institutional buying. Dividends news was actually an event-driven trade, which is quite remarkable. It would seem that, in the age of austerity, dividends paying blue-chips are once again all the rage. It’s pretty clear to me that, as a group, higher dividends paying large-cap companies will continue to be stock market leaders going into 2013.

The stock market is slowly breaking down at this time, but this isn’t really a worry. We just came off a very good first-quarter earnings season with decent visibility for the rest of the year. The best thing the stock market has going for itself now is its reasonable valuation. Fairly priced stocks can withstand a good degree of bad news. I’m not expecting any major surprises in upcoming economic news, but I do expect the second quarter to be slower than the first. We can already see this in retail spending data.

If a meaningful stock market correction were to occur, then it would be an attractive buying opportunity for new positions. Giving the uncertainty in the world, you really can’t expect much going into 2013. From my perspective, if the stock market were to finish the year where it’s at right now, then it would be a decent year for equity investors. I think this is a market where investors should focus on the leaders—those large-cap companies that have done well this year and pay higher rates of dividends to shareholders. Right now, a blue-chip company’s dividends payment is really the only reliable source of income an investor can find.