The stock market has gotten off to an ugly start to 2024, but beginner investors need not worry. Interest rate cuts may still be on the way over the coming months. Though many investors may have overplied into certain trades in response to a more dovish tilt in central bank commentary, I’d argue that it’s much better to have a slight dip now than to have a worse one at a later date.
After more than a year of relief gains, it can be hard to remember what it was like to ride markets lower in the early part of 2022. After stocks rise for many sessions or weeks, a mild pullback of 2-3% can feel harsh.
And a 10% correction?
Those feel particularly painful. And though it’s tempting to look for reasons as to why a rally can falter, I’d argue it’s a much better idea to tune out the noise and focus on unearthing stocks at discounts to their intrinsic value.
Don’t let market turbulence derail your investing plans!
Corrections are never easy to go through unless you’ve been investing in markets for a while. However, they are a good thing for self-guided investors who have new money to put to work. Though having cash on the sidelines can pay off when markets go south, high inflation is the opportunity cost of holding cash. So, be aware of the risks you’ll face across all fronts. That way, you’ll be prepared to allocate capital in a way that mitigates the risks on your radar.
Of course, there are risks that come from out of the blue, especially when it comes to stocks. That’s why it’s vital to have a long-term mindset. Many of the risks that rock markets aren’t worth sweating over if you’re committing to investing over a period of 15 years or more.
Such dips and plunges are going to happen. And you’ll need the discipline to hold (or buy more shares) through tough times, positioning yourself for a relief rally.
In this piece, we’ll check out one dividend stock that’s a great pick for dividends and growth.
Magna International
Magna International (TSX:MG) is a rather cyclical firm in the business of making auto parts. When all is when, and the economy is soaring higher, demand for big-ticket durables, like autos, tends to be more robust. The auto market’s boom and bust nature carries into the auto-part makers. Right now, it seems like Magna has already gone bust since peaking in 2021.
The stock is off around 40% from its all-time high and appears to have gone into hibernation, perhaps waiting for the economy’s next big upward move. With a recession on the way, auto-part makers could be waiting a while for demand to really heat up. At $75 and change, though, I’d be more than willing to punch my ticket into the likes of a Magna. There’s a 3.26% dividend yield to collect while you wait for the economy to turn.
Over the long run, I believe the rise of autonomous and electric vehicles is a secular tailwind for the auto-part makers. That’s the growth narrative for Magna.
In the meantime, we’ve got a bout of economic turbulence to drive through. For Magna, I think it could drive through without falling into a further rut. The stock still looks cheap right now.
