The Motley Fool

2 Safe Dividend Stocks to Buy During a Market Crash

Image source: Getty Images.

Markets have pulled back, and fear is at all-time highs. The coronavirus has been the top stressor as of late and has created doubt regarding growth in international markets. Economists from Canadian banks have recently stated that they believe the economy is in or is heading to a recession.

Based on that information, it is easy to fall into fear and panic-sell your current holdings. The media competes for clicks, and showing global turmoil gets views. What is important to know is that historically, markets recover. Dividends are still being paid, and operations will continue to grow when the virus is defeated.

If you didn’t sell before the market crash, I would hold. If you did sell before the market crash, I would buy these dividend stocks to generate strong dividends and share price appreciation in the future.

This telecom company continues to grow and won’t stop

Telus (TSX:T)(NYSE:TU) is a top pick during this current market adjustment, and I’ll explain why. While GDP contractions in Canada are forecasted due to the virus, the virus should increase telecom usage.

People are constantly using their phones and, in turn, using data to stay up to date on headlines. Internet and cell service providers have recently removed all overage costs due to the virus. I believe that people during this time will not cancel or switch their service considering they are stuck at home. While revenue growth might not be as strong as previously anticipated, the underlying business will not be affected by the virus.

Telus, as of writing, pays a 5.33% dividend and has stated that the company intends to increase the dividend by 7% to 10% annually.

This indicates the company is confident in it future cash flows for the foreseeable future. The dividend is backed up by strong free cash flow and has only increased since 2001.

Rare opportunity to buy into a safe industry

Scotiabank (TSX:BNS)(NYSE:BNS) is my second top pick to buy during this market correction. Shares have pulled back, as of writing, about 30% and to prices not seen since 2016. The Canadian bank industry has historically recovered from market crashes and is a relatively low-risk investment compared to other industries and sectors. I believe this creates an irresistible opportunity to buy low and profit long term from strong dividends.

The dividend yield as of writing is pegged at approximately 6%. Scotiabank has never cut the dividend and has increased the annual payout 43 out of the previous 45 years. With Scotiabank continuously generating record profits, I can confidently say the company will not cut the dividend in the near and far future.

Conclusion

Warren Buffett once said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” It is important now, more than ever, to be greedy and take advantage of discounted share prices. These opportunities don’t come often. Stay calm and invest on!

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends BANK OF NOVA SCOTIA. Fool contributor Andrew Gudgeon does not own shares in the companies mentioned.

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.