As the world essentially stopped these last few months, many of us finally had the time to do things that we had always wanted to do, learn new things that had always interested us, and focus on new hobbies that were always on our to-do list, but never able to come to light. One of the unexpected, but great things that I have come to encounter during this time period is the network of new friends that could come out of this pandemic. Some of the most valuable friendships that I have come from those who know things that I do not, and who can teach me to be a better self.
As I launched this blog, I was able to do just that. I met a new friend (and fellow Engineer), who is an expert in areas of finance that I consider to be foreign to me, but that I want to learn. I am fortunate enough that this new friend has agreed to right a guest blog post on the website. Derek is knowledgable, well-spoken, and skilled at picking dividend stocks (the subject that I really want to learn more about). So let me formally introduce him! Derek, a Financial Independence blogger and author of EngineerMyFreedom.com, invests in dividend stocks as mentioned above. I hope you find his guest post below to be enlightening, interesting, and educational. Enjoy!
Investing in the stock market sure has provided a bumpy ride so far this year. The COVID-19 pandemic has upset the applecart, so to speak, and many stock investors are selling their shares and fleeing the market. This has given rise to depressed stock prices and a major increase in market volatility, mostly due to concerns and fear about the future. Wise investing sages tell us that it is precisely at times like this that one should be on the lookout for great investment opportunities in the stock market. Seesawing stock prices enable the savvy investor to purchase strong, well-run companies at bargain prices. In particular, the value and dividend investor can make some excellent buys of stocks on sale during these tumultuous times.
Having a list of high-quality companies that one would buy at a discount is the first step in my process. My current hot-watch list has three dividend-contender stocks, which are highlighted below. These are quality name companies with a long history of paying a generous portion of their profits back to investors as quarterly dividend returns. I believe they are now available at bargain prices.
3 Great Dividend Stocks on Sale
Stock Pick #1 - Comerica (CMA):
The COVID pandemic has hit many banks and financial service firms particularly hard. CMA, founded in 1849 and headquartered in Dallas, Texas, is no exception. It’s share price near its yearly low. With the light beginning to appear at the end of the COVID tunnel, analyst firms are beginning to notice CMA and some are raising their views on its future performance. In late April, the chart of CMA daily prices printed a bullish “triple bottom.” At current prices, CMA pays out a yield of over 9%. It goes ex-dividend on July 15, paying an expected 68 cents per share to its investors.
Stock Pick #2 - Iron Mountain (IRM):
Founded in 1951, IRM is the global leader in storage and information management services, and provides its goods and services to over 225,000 firms and other organizations around the globe. It has increased its quarterly payments to shareholders each of the last 10 years. It is currently hovering near its 52-week low and pays a generous 11% yield at current depressed prices. The ex-dividend date of June 12 is expected to pay out 62 cents per share to its stockholders.
Stock Pick #3 - Simon Property Group (SPG):
The pandemic has not been good for retailers and real-estate firms. Not surprisingly, with the COVID lockdown, people are not shopping or dining out. Since February, Real Estate Investment Trusts (REITs) have been skewered across the board. SPG is the owner of premier properties in the shopping, dining and mixed-use space and conducts business in North America, Europe and Asia. Its properties generate billions in annual sales. This highly rated issue currently sports an amazing 16% yield at current low prices. SPG appears to be in a much stronger financial situation relative to some of its chief competitors, Kimco Realty (KIM) and Macerich (MAC). It is a favorite holding of many exchange-traded funds (ETFs), including Schwab U.S. REIT ETF and the Real Estate Select Sector SPDR Fund.
Effective Ways To Time Your Buying
Buying solid dividend-paying stocks such as these could enable the intrepid investor to generate a reliable income stream during times of heightened market volatility. This income could be spent, or better yet, reinvested in additional shares of quality companies available at a price discount. Over time, by reinvesting returns, an investor's regular income stream and net worth should grow. Here are two techniques I use to help me judge if I am buying these issues at an excellent price:
- Technique #1: I wait for a down day in the market. Buy the shares on a down day and when the stock is at or near the low for the day. The issues you are after are already discounted relative to their 52-week high. This puts discipline in my buying and helps ensure that I am obtaining a nice price for my stock.
- Technique #2: I consider selling puts to obtain stock. This is a somewhat sophisticated way to obtain stock. In essence, the put seller earns a premium to take on the obligation to purchase shares at a certain price. The savvy put seller wants to get his or her shares at an even lower price than is currently available and is paid to do so. This technique may be the subject of a future blog post.
In Conclusion: This Is A Great Time To Find Quality Stock Investments
All market downturns in the past have been followed by higher prices later. It is during the fog of uncertainty that develops in market drops that shrewd, long-term investors upgrade their portfolios. We appear to be in one of those times now when quality, well-run firms are presenting themselves on the bargain table.
What other stocks are on sale right now?