As markets enter an uncertain phase ahead of the US presidential election in November, it is important for long-term investors to look for opportunities when stocks enter another deep slump.
The drop fell 3.5% on Wednesday, the biggest drop since June 11, amid an increase in hospital admissions in COVID-19 and as millions of voters prepare to choose the next leader. This sell-off could increase further if the pandemic continues and the new government is forcing the reversal of measures to reopen the economy. The index rebounded slightly yesterday and closed just over 1%.
While stocks have seen many swings in recent months, investors should focus on those factors that will deliver long-term returns: dividend yields, earnings growth and changes in value. In addition, any possible weakness in stocks could create another opportunity for income investors to buy some top dividend names that have become expensive following the strong upward movement since the March dip.
Below, we have three shortlisted stocks that you should keep in mind to buy when they get cheap when the markets plunge again.
1. McDonald's Corp
One of the world's largest fast food chains, McDonald's Corp. (NYSE :), has had a tremendous run since its fall in March. The stock is up 73% since March 18, better than the.
One reason for this strength is that MCD far outperformed most restaurants during the pandemic, aided by its vast network of drive-thru locations. Earlier this month, the company reported that comparable store sales were positive throughout the month-end on September 30, benefiting from strong average check growth from larger group orders and strong performance at dinner.
McDonald & # 39; s CEO Chris Kempczinski said in a statement this month:
"Our performance in the third quarter demonstrates the underlying resilience of the McDonald & # 39; s brand. Our unique strengths, including our unparalleled drive-thru presence around the world, advanced delivery and digital capabilities, and marketing scale have become even more important during the pandemic. "
With this operational strength, another very important factor to consider when choosing dividend stocks is the stability of the company when it comes to paying dividends. The company has increased its payout every year since 1976, when it first started paying dividends.
With the current dividend yield of 2.31%, MCD stock is now paying $ 1.29 a share each quarter after a 3% increase this month.
2. Home Depot
The home improvement giant Home Depot Inc (NYSE 🙂 proved to be a major beneficiary during the pandemic lockdowns, when people trapped in their homes more spend money on home renovations. Since the plunge in March, Home Depot's stock has rebounded sharply, up about 80%.
Home Depot said in August that sales at the same store rose 23.4% in its tax books, fueled by lockdowns and rising home prices.
"The investments we have made across the company have significantly increased our agility, allowing us to respond quickly to change while continuing to promote a safe work environment," said CEO Craig Menear in the earnings summary.
After this massive upward move, HD stocks seem expensive to some analysts. But if you are a long-term investor, HD stock should be on your radar as it is one of the top income producers in both good and bad times.
Shares closed at $ 269.92 yesterday, up slightly on the day. The stock yields 2.17% and pays a quarterly dividend of $ 1.5 per share. These payouts have increased by 23% per share over the past five years.
3. BCE Inc
Telecom companies are considered reliable dividend stocks because of their solid cash flows and recurring income. They also become attractive when bond yields fall. In this area, we prefer Canadian telecom markets to their southern counterparts for their income stability and higher yields.
With the central bank on the sidelines for the foreseeable future, their high dividend yields and growing payouts offer an attractive preposition. Of Canada's three largest telecom companies, BCE Inc. (NYSE 🙂 (TSX 🙂 a solid dividend stock to consider for long-term income potential.
Although BCEs are under pressure due to the pandemic-induced slowdown, it is still generating a lot of money with the growing number of wireless subscribers.
The stock is currently trading at $ 40.15, with an annual dividend yield of more than 6%. The operator has an impressive track record in paying dividends, distributing between 65% and 75% of its free cash flow in payouts. Over the past 10 years, the dividend has doubled to $ 0.6325 per share.
