I am absolutely convinced that the stock market is going to crash. However, I don’t have the remotest idea when it will happen. It could be in 2021 or it could be several years from now.
There’s also something else that I’m convinced about: Buying certain dividend stocks when the market crashes is a smart idea. You can lock in fantastic yields when you invest in the right dividend stocks that are trading at low prices.
What are the best stocks to scoop up during a major market meltdown? The list includes quite a few great picks. Here are three dividend stocks that I especially think are ones to buy hand over fist if the market crashes.
AbbVie (NYSE:ABBV) already offers a juicy dividend yield of more than 4.5%. And you can count on the company’s dividend continuing to flow and grow. AbbVie is only one dividend hike away from joining the group of stocks known as Dividend Kings — S&P 500 members with at least 50 consecutive years of dividend increases.
What would happen with AbbVie during a stock market crash? Shares of the big drugmaker would likely fall as they did during the coronavirus-fueled sell-off last year. That would push its dividend yield even higher. However, AbbVie stock would probably be among the first to rebound because of the strength of its underlying business.
To be sure, AbbVie faces some uncertainties. The company’s top-selling drug, Humira, faces biosimilar competition in the U.S. beginning in 2023 with sales almost certain to fall. The U.S. Food and Drug Administration (FDA) has held up approval decisions for JAK inhibitor Rinvoq in three indications because of safety concerns raised by Pfizer‘s post-approval clinical study of Xeljanz, which is also a JAK inhibitor.
But Rinvoq has already received FDA approval in treating rheumatoid arthritis. AbbVie remains confident that it will pick up additional approvals. The company also projects a quick return to overall sales growth after a temporary dip in 2023 due to an anticipated sales decline for Humira. I don’t think AbbVie’s dividend will be in any jeopardy — and in the event of a market crash, it would be especially attractive.
Easterly Government Properties
There are a handful of dividend stocks that I’d buy right now without even a moment’s hesitation. Easterly Government Properties (NYSE:DEA) ranks high on that list.
It’s not just because of Easterly’s dividend yield of 4.8% (although it’s hard not to really like that yield). What I especially find compelling about this stock is its underlying business model that makes that dividend one of the safest you’ll find on the market.
Easterly’s name pretty much tells the story. The company owns and leases out government properties. As of March 31, 2021, Easterly’s portfolio included 82 properties, of which 80 were leased to U.S. government agencies. Since then, the company has acquired a building in Kansas City, Missouri, that’s leased to the National Weather Service.
I can’t think of a more secure tenant than the U.S. government. If the day ever comes where Uncle Sam can’t make its lease payments, we’ll have a lot more to worry about than just a stock market crash.
Enterprise Products Partners
Enterprise Products Partners (NYSE:EPD) was one great dividend stock that I personally bought during the stock market plunge last year. By doing so, I locked in a dividend yield of nearly 12%.
The midstream energy stock has soared since the big sell-off of 2020. As a result, its dividend yield has also fallen quite a bit but still stands at a mouth-watering 7.6%.
But could Enterprise Products Partners be in trouble over the long run as the use of fossil fuels drops? Maybe. I’m not too worried, though. The company arguably has a killer advantage with its heavy focus on lower-emission natural gas, natural gas liquids, and lower sulfur crude oil.
Also, Enterprise Products Partners is looking at opportunities to expand into carbon capture, hydrogen, recycling, and renewable fuels. These won’t come anywhere close to supplanting the company’s core business. However, Enterprise is committed to an “all-of-the-above” approach that I suspect will pay off for investors for a long time to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.
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