…growth stocks are typically the first to suffer during bear markets. Because of their inflated prices, growth stocks have farther to fall when the rug gets pulled out from under them.

Stocks that pay dividends, on the other hand, tend to do a little better during bear markets. While the value of dividend paying stocks will most likely decline during a bear market as well, the company behind the stock should still continue paying a dividend.

Just like owning a rental property allows the owner to collect regular rent payments, owning a dividend paying stock allows the owner to collect regular dividend payments. Dividends also currently enjoy preferential tax treatment. Until the end of 2010, dividends are only taxed at a 15 percent Federal tax rate—instead of at your regular income tax rate.

During bull markets when stock prices in general are rising, both growth-stock investors and dividend investors make money. During bear markets when stock prices in general are falling, dividend investors seem to do better than growth-stock investors.

To learn more, click here to watch the video on Dividends in a Bear Market.

5 Dividend Paying Stocks to Buy Now

If you react too quickly to the market bailout, you'll continue to find the stock market a better place to lose a fortune than to make one. As you'll discover, the new market leaders that will rise from the rubble will be driven by financially solid dividend-paying companies in undervalued sectors AND with no exposure to the credit crisis.

Your best move now? Invest in these five income stocks, and you could easily find yourself 35% richer in the next 12 months.

Free educational videos on the stocks, options and forex markets are updated daily at LearningMarkets.com. Click here to check out LearningMarkets.com today!

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