2 Safe Dividend Stocks to Buy if There’s a Stock Market Selloff

When you feel butterflies in your stomach during market corrections, it could be the best time to buy quality dividend stocks.

edit Safety First illustration

Image source: Getty Images

Stock market corrections can make investors feel uneasy fast, as they see their investments losing value and potentially going red. However, that is when it could be the best time to buy stocks. Tremendous gains can be made by buying stocks on sale.

When investors feel uncomfortable, it’s important to stick with quality businesses. These are businesses that you know aren’t going away but will thrive for the long haul. Here are a couple of safe dividend stocks to buy if there’s a stock market selloff. The nice thing about solid dividend stocks is that investors get paid to wait!

Brookfield Infrastructure

When the stock market crashed during the pandemic in 2020, Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) also fell off a cliff to as low as $35 per share. Even if you waited to be safe and bought the dividend stock at about $52.50 per share after it had consolidated, your position would still be 45% higher. Additionally, you would have enjoyed decent dividend income that equates to a yield on cost of about 5.2%. It goes to show that you do not need to buy quality stocks at the bottom to make wonderful returns.

A portfolio manager summed up Brookfield Infrastructure well on BNN in November 2021.

“Large cap, diversified infrastructure play, headed by one of the best asset managers, Brookfield Asset Management. Excellent job building out globally. Better ways to play infrastructure by owning individual names vs. a conglomerate. Good candidate if you want to sleep at night and collect the dividend.”

Varun Anand, portfolio manager at Starlight Capital

Currently, BIP yields 3.6%. The analyst consensus price target represents upside of about 12% over the next 12 months. So, the dividend stock is fairly valued. If it corrects meaningfully, consider buying for growing cash distributions and long-term price appreciation.

Royal Bank of Canada

Many Canadian investors trust our big Canadian banks as core holdings for their dividend portfolios. As the leader, Royal Bank of Canada (TSX:RY)(NYSE:RY) enjoys leading positions in its diversified range of offerings in financial services. Royal Bank stock and its peers have had a great run-up since the pandemic stock market crash.

Back in November 2021, an analyst made the following comments on BNN:

“Usually, banks do well at the beginning of a tightening cycle. We’re in a tremendously over-leveraged economy. As we go along, and rates rise, banks on the other side of this credit cycle might have a tough time. He’s as underweight banks as he’s ever been. TD and RY are still great franchises, but he’s not that excited about the banks. They can go higher, but you have to evaluate the risks of the credit cycle.”

Bryden Teich, partner and portfolio manager at Avenue Investment Management

If investors are taking a cautious stance, they’ll wait for a market correction to buy bank shares. Currently, Royal Bank yields 3.3%.

Investing is an art and science, as it can be subjective and swayed by emotion but also can be researched and planned out by having buy and sell rules. By buying quality dividend stocks during market selloffs, you can take advantage of market fears, lower your risk, and improve your income and total returns.

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 Brookfield Infra Partners LP Units. Fool contributor Kay Ng owns shares of Brookfield Infrastructure.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »