What a difference a year makes.
Last year, the benchmark S&P 500 ‘s biggest correction entailed a decline of just 5%. However, since hitting its all-time closing high during the first week of January, the widely followed index has lost as much as 24% of its value.
It’s been an even bumpier ride for the technology-driven Nasdaq Composite (NASDAQINDEX: ^IXIC). Following its record closing high in mid-November, the Nasdaq has shed up to 34% of its value. With a decline of this magnitude, the Nasdaq is firmly entrenched in a bear market .
While sizable declines in the broader market can be unnerving and unpredictable, what is relatively certain is that they represent the perfect opportunity to put your money to work . Eventually, every notable decline in the major indexes has been erased by a bull market.
The proverbial $64,000 question is: ” Where should you invest your money?”
The no-brainer answer to this question just might be dividend stocks . Companies that pay a regular dividend are almost always profitable on a recurring basis and have navigated their way through turbulent times before. Income stocks might be boring businesses, but they’re just the type of companies we’d expect would grow in value over time.
Dividend stocks also have quite the history of outperforming stocks that don’t offer a payout. According to a 2013 report from J.P. Morgan Asset Management, companies that initiated and grew their payouts averaged an annual return of 9.5% over a four-decade stretch (1972-2012). Comparatively, the non-payers only managed an annualized return of 1.6% in the same 40-year period.
But not all dividend stocks are equal. In an ideal world, investors generate the maximum amount of income with low risk. Unfortunately, studies have shown that risk and yield tend to correlate once high-yield status has been reached (a yield of 4% or above). Because yield is a function of payout relative to share price, a company with a failing operating model and a plunging share price can trick unsuspecting investors into thinking they’ve bought a high-yield money machine, when in reality they purchased an income trap.
Although high-yield stocks certainly require some extra vetting by investors, some truly are money machines for long-term investors. With the Nasdaq mired in a bear market, the following three high-yield dividend stocks are companies you won’t regret buying. Walgreens Boots Alliance: 4.53% yield
The first high-yield income stock you won’t regret buying during the Nasdaq bear market dip is pharmacy chain Walgreens Boots Alliance (NASDAQ: WBA). Walgreens is yielding 4.5% and has increased its base annual payout in each of the past 46 years.
Healthcare stocks are a smart place to put your money to work during periods of heightened volatility. No matter how well the U.S. economy or stock market perform, people will always require prescription medicines, medical devices, and healthcare services. People don’t stop getting sick because the stock market has hit a rough patch. This creates a steady level of demand throughout the healthcare chain, which includes companies like Walgreens.
What’s particularly exciting about Walgreens Boots Alliance is its multipoint growth strategy designed to lift its operating margins, improve its balance sheet, and bring in repeat business.
For instance, Walgreens has reduced its annual operating expenses by more than $2 billion, and it sold its wholesale drug distribution business to AmerisourceBergen for $6.5 billion in June 2021. The company used $3.8 billion from this deal to repay a term loan and lower its outstanding debt by $3.3 billion.
At the same time Walgreens has closed certain doors, it’s opened others . It has spent aggressively on direct-to-consumer and digitization initiatives designed to boost its organic growth rate. Additionally, it’s working with VillageMD (Walgreens is a majority owner of VillageMD) to open 1,000 co-located, full-service clinics in over 30 U.S. markets by the end of 2027. Having physicians on site should help encourage repeat visits by patients.
With Walgreens Boots Alliance’s stock valued at only eight times Wall Street’s profit forecast for this year, it would appear to have an extremely safe floor. Philip Morris International: 4.87% yield
Speaking of safe high-yield dividend stocks you won’t regret buying during a Nasdaq bear market, say hello to tobacco stock Philip Morris International (NYSE: PM). Philip Morris is currently doling out a yield of nearly 5%.
While tobacco stocks aren’t the growth story they were three decades ago, they can still deliver consistent income and steady returns for patient investors who aren’t turned off by the idea of investing in vice stocks.
What makes Philip Morris so appealing is the company’s geographic […]
source Dividend stocks offer a long history of outperformance
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