Now is the time to buy dividend stocks. These companies generate a regular stream of cash simply for owning shares. The picks below, for example, have dividend yields between 4.6% and 9.4%. All you need to do is become a long-term shareholder.
Why is now the time to buy income stocks? They’re the perfect choice when times grow uncertain.
“Everything is uncertain, perhaps to a unique degree,” wrote Jeremy Grantham. “This is a new type of crisis and much will be different. There are no certainties but there are probably still some better and safer themes. Caution and patience are likely to be two of them.”
If you want to protect yourself from market volatility without sacrificing long-term returns, dividend stocks should top your buy list. The picks below demonstrate why these businesses are best for an uncertain future.
This is stability
Brookfield Renewable Partners (TSX: BEP.UN)(NYSE: BEP) has a business model that can withstand any economic shock. Plus, it can grow in any environment too. The 4.6% yield ain’t bad either.
But let’s take a step back first. What exactly does this dividend stock do?
As its name suggests, Brookfield is a pure-play bet on renewable energy. Over the past five years, $1.5 trillion was invested worldwide in renewable deployments. Over the next five years, Bloomberg estimates that investment will balloon to $5 trillion.
Brookfield is at the forefront of this opportunity. It owns some of the biggest clean energy facilities in the world. For example, it recently purchased a giant wind farm in Spain for more than $1 billion.
While wind or sun can vary on any given day, they’re remarkably consistent year to year. And because Brookfield often sells power generation on multi-decade contracts, cash flow visibility is surprisingly clear. Much of that cash flow is diverted to support the 4.6% yield, with the rest going towards growth projects.
No matter where the economy heads, old, high-cost energy projects will be replaced with new, low-cost renewables. Brookfield will be there to capitalize, returning capital to shareholders along the way.
High-quality dividend stocks
Brookfield Property Partners (TSX: BPY.UN)(NASDAQ:BPY) is another fantastic bet for an uncertain world. It has a bit more risk than its sister company, Brookfield Renewable, but the rewards are much higher.
Brookfield Property has always paid a healthy dividend. That’s because the business is set up as a real estate investment trust. The company owns some of the best real estate in the world, including First Canadian Place in Toronto and Canary Wharf in London.
Rental income has typically produced a dividend of roughly 6%, but the COVID-19 crisis has pushed that yield up to 9.4%. This is simply the best dividend stock to buy for risk-tolerant investors.
To be sure, Brookfield Property will have a difficult 2020. But just last month, the company reiterated the dividend. Management stressed that they are not planning to slash the payout.
Meanwhile, the stock itself trades at a 70% discount to book value. As conditions normalize, expect the safety of the dividend to become clear. Sizable capital appreciation should also become a reality for patient investors.
