The Motley Fool

Safe Dividend Stocks Are Like Gold Dust: Here’s What to Buy

What a start to the week. The Dow was down 2,250 points when markets opened, a loss of 9.7%. The S&P 500 opened down 8.4%, and the NASDAQ started down 6.1%. The TSX nosedived 11.4% with even safe dividend stocks on sale. The Dow finished Monday down 3,000 points, its worst performance since 1987. The tech-laden NASDAQ suffered its single worst stock market crash in history.

Wall Street’s fear level hit an all-time high, beating even the 2008 financial crisis. All four exchanges ceased trading for 15 minutes. It was the third time in seven days that trading on the TSX has been halted. The take-home? It you weren’t in defensive positions before the stock market crash, you should be now.

Looking for safe dividend stocks?

Gold is the classic safe-haven commodity. But a safe source of dividends can be as valuable as the yellow metal itself. That’s why Newmont is top of the list this week for a mix of safety, dividends, and, of course, the relative stability of gold. Why buy Newmont during a stock market crash? As the world’s most productive gold miner there’s safety in size. It’s a wide-moat pick with a 1.3% dividend yield.

Even safe dividend stocks can suffer in an economic downturn. However, key arterial rail networks will always be popular, since these businesses carry the lifeblood of our economy. Buy CN Rail shares for some passive income fed by the nation’s most important transport name. Stock market crash investors have a solid play here. Timing the bottom could be a fool’s game, so buy incrementally on weakness rather than wait.

Wash your hands, but don’t sit on them

Stocks are cheap and could rally at any time. That’s why now is a rare, once-in-a-lifetime buying opportunity. Insurance should have some place in a diversified Canadian stock portfolio. Manulife is the biggest and safest name to go for in this space. Manulife’s rocketing yield of 7.6% would complement CN Rail’s dividend of 2.4%.

Energy investors eyeing the oil crash have a strong play in offshore wind growth. Other defensive dividend stocks include Northland Power, a strong buy in the offshore wind space. Meanwhile, Nutrien is the ultimate consumer staples stock and a “must buy” for agri input mineral exposure. Yields are high right now, so lock them in. Northland Power is up at 5% today, while Nutrien is galloping to 6.2%.

Banks are divisive, though. Some rallied as much as 11-16% at the end of last week. But that seems unsustainable, with the potential for recession and the dismal oil outlook. Indeed, the most defensive dividend stocks include regulated utilities and accommodation REITs than from financials right now.

The bottom line

It’s the value opportunity of a lifetime for some. The stock market crash is a gift for anyone coming to stocks for the first time. But don’t sit on the fence trying to time the bottom. There could be worse to come, and this market could be with us a while. That’s why investors should buy incrementally. Get ready to pick up those defensive dividend stocks in small bundles rather than waiting to back up the truck.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway and Nutrien Ltd.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.