If a Bear Market Is Coming in 2026, History Says This 1 Investment Is the Safest Place to Park Your Money
2026-07-31 09:30
•John Bromels •The Motley Fool
••• •• Axe Cap view
The Safer Haven When Markets Turn Sour
High dividend stocks tend to hold value better in downturns, but sacrifice growth in good times.
If we brace for a bear market by 2026, history offers a clear strategy: seek steady dividends rather than chasing growth. The Vanguard High Dividend Yield ETF (VYM) has shown resilience during recessions, losing far less than broader indices like the S&P 500. While this ETF isn’t listed on the JSE, South African investors can find echoes in income-heavy sectors like utilities or major banks such as Standard Bank and Nedbank, which offer strong dividend yields and relative stability. In contrast, growth-focused assets like Naspers or Prosus often take bigger hits in downturns. With the rand’s typical volatility—against the USD especially—holding companies with solid cash flow and consistent dividends can act as a buffer. Expect these names to lag during bull runs but outperform when the market sours. The catch? If the economy surprises with a robust recovery or extended bull phase, dividend-heavy stocks might underperform. this is just our opinion and not financial advice
Favor adding high-dividend South African banks and defensive sectors now for downside protection, but trim when sentiment lifts and growth stocks regain favor.
- Standard Bank
- Nedbank
- USD/ZAR
- Surprise economic growth prolongs bull market
- Rand strength reverses, impacting exporters and banks
7/10
The article suggests that the Vanguard High Dividend Yield Index Fund ETF (VYM) has historically outperformed during bear markets and recessions compared to the S&P 500. However, it underperforms during bull markets, making it suitable only for investors specifically seeking downside protection rather than long-term growth.
Our take is based on reporting first published by The Motley Fool.