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Don’t Panic in a Market Pullback: Buy These Dividend Stocks Instead

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The S&P/TSX Composite Index was down 110 points in mid-morning trading on March 12. March opened with a bout of volatility that spooked analysts as bond yields rose sharply. However, the passing of the $1.9 trillion U.S. stimulus package appeared to calm things down this week. Investors should still be cautious as stocks look broadly overheated according to reliable measurements like the Buffett indicator. Canadians should not panic in a market pullback. On the contrary, that is the time to look for opportunities.

Today, I want to look at three dividend stocks that are worth stashing ahead of a market pullback. Let’s dive in.

This industry has thrived during the COVID-19 pandemic

Two years ago, I’d discussed why a wine-oriented stock was recession proof. Alcohol consumption has increased in Canada and the United States during the COVID-19 pandemic. The industry has proven resilient during previous downturns. Corby Spirit and Wine (TSX:CSW.A) is a Toronto-based company that manufactures, markets, and imports spirits and wines.

Some of Corby’s top brands include Wiser’s whisky, Polar Ice Vodka, Lot 40 Canadian Whisky, and Royal Reserve. It has gained significant traction with the release of new premium gin brands in recent years. This dividend stock has climbed 18% year over year at the time of this writing. Corby stayed resilient during the March 2020 market pullback. The company released its second quarter fiscal 2021 results on February 11.

Year-to-date revenue for the first six months increased 4% for Corby-owned brands on solid overall revenue growth of 4%. Net earnings have climbed 30% from the prior year to $18.7 million for the first six months of FY2021. Corby stock possesses a favourable price-to-earnings ratio of 15. In Q2 FY2021, the company announced a quarterly dividend of $0.21 per share, which represents a 4.8% yield. This dividend stock is well worth stashing in the event of a market pullback.

A dividend stock that is set to grow due to aging demographics

Sienna Senior Living (TSX:SIA) is a Markham-based company that provides senior housing and long-term care (LTC) services in Canada. Its shares have increased 11% from the prior year. Sienna unveiled its final batch of 2020 results on February 18.

At the time of its earnings release, 92% of Sienna’s LTC residents and about 60% of its LTC team members had been vaccinated. Operating expenses at Sienna have grown 4.4% from the prior year to $140 million. The company came out of the year in a solid liquidity position.

This dividend stock offers a monthly distribution of $0.078 per share, representing a tasty 6.7% yield. Sienna is a solid option to hold during a market pullback.

One more stock to stash in a market pullback

Shaw Communications (TSX:SJR.B) is another good option for investors who want to generate passive-income during a market pullback. This Calgary-based company operates in the connectivity space across Canada. Shaw stock has climbed nearly 24% year over year.

The company released its first quarter fiscal 2021 results on January 13. It achieved Wireless net additions of approximately 110,000 in the quarter. Wireless service revenue growth hit about 10%. Adjusted EBITDA increased 3.2% to $607 million.

Shares of Shaw last had a P/E ratio of 17, better than the industry average. It offers a monthly dividend of $0.099 per share, representing a strong 5% yield. This monthly dividend stock can withstand a market pullback in the months ahead.

Here are 10 stocks to snag in March . . .

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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.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CORBY SPIRIT AND WINE LTD CLASS A.

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