How Will Dividend Stocks Perform This Year?

Income investors have been panicked so far this year as share markets have spent much of 2016 on the decline. With China's markets continuing to crumble and investors pulling their money out of the market quickly, it has been difficult to find a secure investment option that promises steady returns. However, when markets are on a roller coaster ride, investors often turn to dividend stocks for some stability.

2015 turned out to be a difficult year for dividend stocks as their returns were far outpaced by growth stocks. The energy sector was particularly hard hit by low oil prices and investors with money in that industry saw their funds take a nosedive. This year, many point to the Federal Reserve's plans to continue raising interest rates as a sign that markets are in for another bumpy ride, but that may not be true, especially for long term investors. Investing in diversified dividend stocks can be a great source of income for traders with a long-term strategy and as Fed Chair Janet Yellen has underscored— the Fed's rate hike is evidence of an improving economy, something that is good for the overall market.

While some firms are forecasting dividend growth to decline this year, other analysts believe that firms with a healthy amount of cash will continue to raise their payouts. When it comes to choosing dividend stocks,

recommended picking companies that look poised to hike their dividends like retail giant

or glass-maker

. Others are looking to

dividend stocks like

or

as those firms not only have a history of hefty yields, but they have a large market share and boast strong balance sheets, so they are more likely to provide some stability even in a turbulent market.