With the uncertainty in the markets, it is not a time to panic. It is time to consider buying quality dividend-paying stocks. While I am going to mention several dividend-yielding stocks in this post, I am not making any suggestions that anyone should buy these stocks. All I am doing is using them to explain and examine that with the market downturn, these stocks dividend yields are up due to their prices being down. While many of the stocks I will mention are well-run and respected companies, I do not predict what will happen with the current COVID-19 pandemic and how they will react. That is for you to decide for yourself as to whether these stocks are a good fit for your portfolio.
Value Investing
What has made Warren Buffett so successful is his approach to investing, and that is the Benjamin Graham approach, which is value investing. That is, you want to purchase stocks at a discount to their value, which many stocks are in now or will be soon in the current market conditions. You want a company with a strong balance sheet which many had until recently, what happens next is anyone’s guess. You will have to determine if the company and the share price will be able to recover from the COVID-19 pandemic, or will it have some serious issues with recovery, think travel and hospitality here. If it will recover with little or moderate assistance from the COVID-19 pandemic and will return faster than other stocks, think consumer staples and utilities here. And how safe is the company’s dividend, or will it be cut during the pandemic. For this, you will have to do some homework and look at the income statement, balance sheet, and cash flow statements.
Dividends
One of the things that we have learned from other bear markets and recessions is that companies with a strong history of paying and raising dividends recover faster than those who do not have that history. While the stocks I will mention pay dividends, they may or may not have a strong balance sheet and income statement that will or can support the dividends they pay. The companies or funds I am going to list all pay dividends. Some have a long history of paying and increasing them. Others do not. The one thing that they all have in common is that less than four weeks ago, all of these dividend returns were a fraction of what they are as of Monday Match 23, 2020, before the market opening.
What you need to do with these stocks or any stock you are considering buying is to really look into the company’s three critical statements to determine the health of the company and thereby the dividend it pays. A lot can be learned from examining the balance sheet, income statements, and cash flow statements to determine if the company and its operations are healthy and can be sustained. And in the current COVID-19 environment, what was a healthy company may no longer be. But others will be better when this end than others. As I alluded to, consumer staples will be better off than airlines.
Companies and Their Yields
| Company | Yield |
| KO | 4.20% |
| CVX | 8.18% |
| COP | 5.40% |
| T | 7.21% |
| PETS | 4.17% |
| VZ | 4.70% |
| DIS | 2.05% |
| VIG | 2.29% |
| VDADX | 2.25% |
| BAC | 3.51% |
| AEP | 3.83% |
To examine these and other dividend-paying companies, you can go to sites like Yahoo Finance or Morningstar to get some of the information that will assist you in making your buy or sell decisions. For more detailed information on publicly traded companies, you should go to the Securities and Exchange’s website, and in particular, the portion named EDGAR to obtain government-mandated filing on each company. In these reports, you can learn a lot about what a company is doing and gather insight on its health.
Conclusion
While I own some of the stocks listed above and others, I have advised people to either purchase or sell. They all fit the general idea of this post, and that is dividend yields in the current market environment. While I am writing this, the markets are set to open about 5% lower than Friday’s close, and it seems that we may not be done with the bleeding of the market and the economy as a whole. But times like this do provide an opportunity to purchase some good well-run companies at a discount to what they were trading at just four weeks ago. Are we at the bottom? I do not know the answer to that, and no one else does either. But I do know it is an opportunity to buy if you find an excellent company that you feel comfortable buying.
If you have any questions, please feel free to reach out to me or any Registered Financial Consultant. And if you are interested in our email newsletter, please fill out the form below.
