Was That the Bottom? A Sober Dividend Investing Strategy

Brett Owens, Chief Investment Strategist
Updated: March 18, 2020

Last Thursday was the sixth-worst day on record for the S&P 500 (according to information from Nasdaq Dorsey Wright). Was. It’s already down to seventh place (yikes).

On Monday, it was quickly eclipsed by the third-worst day ever for the S&P 500 on record. Even in 2008, we didn’t have a single down day as severe as either of these days.

In fact, we’ve only had selling pressure this intense happen twice in the post-World War II era. The first was the October crash in 1987, and the most recent was in the fall of 2008.

Believe it or not (and most did not at the time), both were actually buying opportunities. Even late 2008.

Let’s take the worst day of that year. On October 15, 2008, the S&P 500 slid 9% in one day. If you bought then, you needed a strong stomach because it continued to decline (with high volatility) for a few more months.

But investors with tough guts were ultimately rewarded. They earned 23.9% returns in just one year—one that included the early 2009 slide:

A “Close Your Eyes and Buy” Moment…

Now I’m not saying that all dividends will be just fine. Many of you have written in to ask about potential problem areas such as real estate investment trusts (REITs). The worry here is that if bars, restaurants and retail locations are forced to close for extended lengths of time, then they won’t be able to pay their rents. And then, the REITs that are supposed to collect these checks won’t be able to settle up with their investors and pay their dividends.

During cascade selloffs like these, we sometimes overlook that the stock market is a market of stocks (and funds). Every stock and fund is unique, with its own cash flows and payouts from those income streams.

I’m constantly keeping an eye on the cash flow streams of our dividend payers. It is, admittedly, more challenging right now than ever before.

If and when the facts of a particular situation change, I then change my “buy, hold or sell” recommendation right away. During these volatile times we are not going to dump any shares out of panic. However, we do reserve the right to sell a specific stock (or fund) to raise capital if we believe it can be deployed elsewhere more profitably. Either now, or quite soon.

As business models fall out-of-favor, we’ll sell specific stocks (and/or funds) and raise cash.

And we shouldn’t be afraid to sit on some dry powder these days. We are going to have some historic buying opportunities in the weeks and months ahead.

In the meantime, as in 2008, it is time to emphasize return of capital and, of course, dividend safety. We’ll continue to circle the wagons around our safest payouts.

And let’s not kick ourselves for giving back previous gains. Losses frequently cloud judgement. We need to peer through the current panic fog and buy dividend stocks that we’ll be staring at in 12 months, wishing we’d bought when they were discarded in this monumental selloff. As soon as we get that signal, I’ll let you know .

In the meantime, please stay safe, keep healthy and again, don’t be afraid to keep some cash on hand for some serious online dividend shopping in the months ahead.

Introducing the “Pandemic-Proof” Income Portfolio Paying Up to 9.8%

The “cash or bear market” no-win quandary inspired me to put together my 5-stock “Pandemic-Proof” portfolio, which I’m going to GIVE you today.

These five income wonders deliver two things most “blue-chip pretenders” don’t, such as:

  1. Rock-solid (and growing) cash dividends up to 9.8%.
  2. A share price that doesn’t crumble beneath your feet while you’re collecting these massive payouts. In fact, you can bank on 7% to 15% yearly price upside from these five “steady Eddie” picks.

With the Dow regularly lurching a stomach-churning 1,000 points (or more) in a single day, I’m sure a safe—and growing—8% every single year would have a lot of appeal.

And remember, one of these titans pays up to 9.8%.

Think about that for a second: buy this incredible stock now and every single year, nearly 9% of your original buy boomerangs straight back to you in CASH.

If that’s not the very definition of safety, I don’t know what is.

These five stout stocks have sailed through meltdown after meltdown with their share prices intact, doling out huge cash dividends the entire time. Owners of these amazing “Pandemic-Proof” plays might have wondered what all the fuss was about!

These five “Pandemic-Proof” wonders give you the best of both worlds: CASH dividends up to 9.8%, with your feet firmly planted on a share price that holds steady in a market inferno and floats higher when stocks go Zen.

Click here and I’ll share the names of these five ultimate income investments, including their tickers and ideal buy prices along with my full analysis and research.