Ahead of any downturn in the markets, it’s a great time for investors to take a hard look at their portfolios and see if there are some things that should stay, while others should go. After that point, it’s important to take a look at what could possibly replace those stock options for these periods of economic struggle.
That’s where dividend stocks can be beneficial. When a company offers dividends, it usually means it has the strength to hand out cash to investors, and continue growing its operations in the meantime. But this can also mean dividend stocks don’t come cheap — that is, unless you know where to look.
That’s why today I’ll be talking about three relatively unknown dividend stocks for investors to consider ahead of a recession. Each offers a way to invest in companies that will likely be hit far less than a bank or energy stock, and will continue to dish out dividends for its investors. And, given that the markets are down, right now these stocks are a steal.
WPT Industrial Real Estate Investment Trust (TSX:WIR.U) is an ideal investment for those looking for long-term growth coupled with great dividends. While WPT is a relatively new company, it has placed itself in an area to take advantage of the e-commerce boom.
The company operates 70 light-industrial buildings, where it can store and distribute products for e-commerce companies, with a 99.4% occupancy rate.
As this industry continues to grow, so will WPT and its share prices, and that should lead to some strong dividend increases as well. The company currently offers a dividend yield of 5.46%, which equates to $0.0633 per share per month, or $0.76 per year. Given that the share price is already so low at $13.80 at the time of writing, that can add up quickly with a strong investment in this growing company.
The utilities industry as a whole is an excellent place to store your cash during a downturn, and if you’re going to consider that option, I would definitely look into Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN).
This utilities company owns U.S. renewable and regulated assets that are a necessity to its customers, so even if a recession happens, Algonquin will keep on running.
Meanwhile, the company continues to expand throughout the U.S., while also paying down its debt and keeping a solid dividend yield of 4.37% as of writing. That equates to $0.75 per share per year, or $0.1875 per share per quarter. Again, with a share price at about $17.25 as of writing, a solid investment would bring in quite a bit of cash from this company.
Finally, we have another utilities company with Canadian Utilities (TSX:CU), a company that has delivered dividends for a solid 48 years and counting. The company operates in the electric utility sector — an area that should continue to have strength and stability even through a recession.
In fact, the company has already announced second-quarter earnings of $126 million — an increase of 18% from the same time last year.
This means the company should continue delivering on its strong dividend of 4.42%, which equates to $1.69 per share per year, or $0.4225 per share per quarter. While the share price is slightly higher for this company than the other two, Canadian Utilities is a solid investment for the long term, with growth projects that should see its shares continue to rise for decades.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. WPT Industrial is a recommendation of Dividend Investor Canada.