3 supercharged dividend stocks to buy in the event of a market sell-off
As painful as selling can be, these are often great opportunities to load up stocks that would otherwise be too expensive to buy, and that doubles for dividend-payer stocks. Today I’ll be looking at a trio of stocks that have very stable dividends and have already stood the test of time.
These three stocks have somewhat low dividend yields compared to the market average of 1.2%, and this is one of the many reasons why they are ripe for buying in the event of a sell-off, correction or crash. on the market. If external factors cause these stocks to fall, this will increase the yield and make them even more attractive for investment.
So, without further ado, let’s take a look at these three supercharged dividend stocks to see if they could be the right choice for your portfolio in the wake of a price drop.
1. Abbott Laboratories
What do BinaxNOW Antigen Tests, Continuous Glucose Monitors and Pedialyte have in common? If you guessed that these are just a few of the products made by Abbott Laboratories (ABT -1.17% )you would be right.
With such an introduction, no one should be surprised to learn that Abbott’s $43.1 billion in 2021 revenue comes from an incredibly diverse set of sources. Between medical nutrition products, surgical tool sets, diagnostics and medical devices, its quarterly revenue has grown more than 81% over the past five years. The same goes for its dividend, which has increased by 77% over the same period.
Additionally, Abbott’s dividend has been increased for the past 50 consecutive years, making it a Dividend King. This means that it’s probably safe enough to expect his payout to continue to increase over time, thereby increasingly rewarding long-term investors.
If there is a sell-off in the market, it won’t change Abbott’s ability to do business or the reasonable expectation that its dividend will continue to grow. But it will increase the stock’s dividend yield – currently 1.5% – meaning it will take you less time to recoup your cost base.
2.Thermo Fisher Scientific
Thermo Fisher Scientific ( TMO -0.64% ) manufactures an assortment of different products for biomedical research. And with a market capitalization of $209 billion, it’s also one of the largest companies in the world and in healthcare.
Last year, it made $39.2 billion from sales of its analytical instruments, scientific analysis devices, laboratory services and specialty diagnostics. Of its revenue, 46% comes from sales to pharmaceutical and biotech companies, and 58% of its revenue comes from sales of consumable products that customers will need to purchase repeatedly.
Thermo’s close relationship with the life sciences has been quite lucrative over time; over the past 10 years, its quarterly revenue has increased 250% and its quarterly net profit has jumped 498%. Moreover, its dividend has increased by more than 130% during the same period.
It’s hard to imagine a future in which its products aren’t ubiquitous in nearly every biomedical laboratory on the planet. The biggest problem with Thermo shares is that its forward dividend yield is just 0.2%. This makes it particularly ripe for a pickup if the market drops.
3. Wholesale Costco
If you are unfamiliar, Wholesale Costco ( COST 0.96% ) is a huge discount retailer and it’s also a great dividend stock. The wholesaler’s business comes from the wholesale of groceries, consumer health products, clothing and its annual dues, not to mention a host of other products, all distributed from its 828 warehouses around the world.
And thanks to its focus on selling at low prices and providing superior service, its loyal customers aren’t likely to go anywhere else, even during turmoil in the economy. Of Costco’s 114.8 million members, 92% choose to renew their membership each year, earning the company $4 billion since the second quarter of 2021.
In the past 12 months, it has sold $206.2 billion in merchandise. Over the past 10 years, its dividend has increased by 187%, fueled by a 170% growth in the company’s quarterly free cash flow (FCF) and a 126% increase in its quarterly revenue over the past 10 years. of the same period. It is therefore safe to say that the management team is effective in executing the business model.
Its forward dividend yield is currently 0.6%, but that’s not all. Once every few years, Costco tends to distribute a special dividend, which temporarily boosts its yield. Therefore, buying stocks during a sharp decline is a great way to expose yourself to these massive special payouts whenever they may occur.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.