Dividend stocks

Dividend-paying stocks are another common component of low risk investing, popular for their regular income, but also in many cases capital appreciation. These stocks tend to be well-established blue chip companies with stable cash flows and strong balance sheets, which helps to sustain consistent dividend payments even during economic downturns.

Some of the most popular dividend stocks reside in the FTSE 100, including Legal & General, British American Tobacco and National Grid. The key factor to consider is whether the company behind the stock offers a product or service with inelastic demand — or in other words, whether it will be in demand regardless of economic conditions. Insurance, tobacco and electricity…