When the whole market drops, long term dividend growth investors rejoice. Many high quality companies will be on sale at 5-10% discounts, often selling at prices we haven't seen in a year, or beyond. If you've done your research and have money ready to go, this is your chance to beef up your portfolio.
Unfortunately, I've just put my monthly allowance into JNJ recently, so I don't have fresh cash available right now. If things stay low I will invest early September.
It is refreshing to talk about a market drop in terms of buy opportunities. Before I was heavy into dividend stocks, I focused on capital gains, and a day like today would be terrible. I suspect it will take some time to recover. For dividend stocks this is great. In fact, I think that those companies that committed to share buy backs are having a ball today. I'm not clear about regulations, but today'd be a great day to buy back shares in large amounts. This in turn is good for earnings per share and hence dividends per share. It allows companies to meet their dividend obligations. For dividend investors it means the dividend and dividend growth is just that much more save.
Of course there are underlying reasons for the market drop. The China situation should not be under-estimated. But it 'feels' like there is no real data to support why some companies dropped in valuation this much in one day. They certainly didn't lose customers or announce bad sales today. So I think the best approach is to keep investing. Average down where possible. Start new positions for those gems that are never on sale. And then watch things recover.