Recent market volatility reminds me of anecdotes told by tsunami survivors. Victims neglect to notice the steady pounding of surf on the beach, with each wave followed by a stronger one. Before they know it, waves the size of office buildings come along and lay waste to everything in their path.

The past few weeks, we’ve been seeing market sell-offs, followed by rebounds, on a consistent basis. Inflation fears and rising bond yields are roiling the markets. Exacerbating investor anxiety are sudden spikes of the coronavirus in countries such as India, where the death toll is staggering. The investment seas are getting choppy.

Veteran investors may be fairly accustomed to stock market volatility, but if you’re a newer investor, it’s easy to get spooked.

Don’t get me wrong: I’m not forecasting an imminent financial tsunami that will wipe out the world’s stock markets. Instead, I consider these escalating waves of volatility to be a warning to increase your exposure to defensive assets.

Below, I examine a time-proven shelter from potential financial storms: growth dividend stocks. These stocks historically have offered compelling performance during bull markets and provided a buffer during market pullbacks.

First, let’s look at some recent good news. The Labor Department reported Thursday that initial claims for jobless benefits totaled 444,000 last week, below the consensus expectation of 452,000. The total marked a decline from the previous week’s 478,000 and was the lowest since March 14, 2020 (see chart).

The positive jobs data sent U.S. stocks soaring Thursday. The Dow Jones Industrial Average rose 188.11 points (+0.55%), the S&P 500 climbed 43.44 points (+1.06%), and the tech-heavy NASDAQ jumped 236 points (+1.77%). European stocks rose and Asian indices were mixed.

As of this writing Friday, the three U.S. indices were trading sharply higher, mostly erasing losses incurred earlier in the turbulent week.

Twin dangers…

I’m generally bullish about stocks in 2021, but I see two salient risks that can’t be ignored: 1) excessive investor risk-taking encouraged by low interest rates, and 2) increasing corporate debt combined with declining credit quality.

Historically low rates are prompting investors to take higher risks. At the same time, corporations are leveraged to the hilt. The ratio of the debt of non-financial businesses in the U.S. to gross domestic product is historically high and companies’ leverage (the ratio of debt to earnings) continues to rise.

At the same time, we’re witnessing casino-type recklessness among investors, in the form of “meme” plays, market-moving tweets, multi-billion-dollar cryptocurrency initial public offerings, special purpose acquisition companies, and non-fungible tokens. The values of major cryptocurrencies such as Bitcoin (BTC) continue to fluctuate wildly; this week at one point Bitcoin was down by 30%.

How to keep an even keel…

With more volatility probably ahead, I like solid dividend-paying growth companies. Holding companies with dependable yields can offer a safe harbor for investors bedeviled by uncertainty.

Read This Story: Dividend Stocks: “Boring” But Bountiful

Companies that pay consistent and growing dividends are among the most valuable additions to your portfolio. When the stock market acts like a roller coaster, growing firms that have made a commitment to strong and rising dividend payouts provide much-needed stability.

When selecting a dividend payer, our investment team looks for a low debt-to-asset ratio, leadership in its field, a history of earnings and dividend increases, and adaptability to economic changes.

Regulated, U.S.-based utilities stocks are good proxies for dividend growth. Utilities provide essential services, a virtue that tends to make their stocks resistant to economic downturns and overseas shocks. For our list of the highest-income, lowest-volatility utilities stocks, click here now.

John Persinos is the editorial director of Investing Daily. He also edits our premium advisory, Utility Forecaster. You can reach him at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.