As my colleague, Mike King, wrote yesterday: 'Dividends are still King'.
But if the Australian sharemarket's 15% fall since March has showed us anything, it's how fickle local investors can be during times of perceived uncertainty.
In fact, the Australian economy is actually growing at a time when similar commodity-driven countries like Canada are in a technical recession. But as soon as the buzzwords 'China' and 'recession' are thrown around, investors flee the sharemarket.
For the record, this is the time to buy shares, not sell them.
And if you're truly a long-term investor – in it for 10 years or more – what purpose will worrying about the last six months serve you?
I like to think of the latest market falls as an opportunity to buy great companies, such as the five blue-chips below.
After all, official interest rates remain at a record low (2%), and many blue chip companies are offering yields more than double the return from fixed interest. Sometimes, they're also tax-effective!
5 dividend stocks to buy in the market crash
- Flight Centre Travel Group Ltd (ASX: FLT) – Gross dividend yield: 5.90%
Flight Centre's profits may be impacted in the short-term by choppy consumer confidence and a falling dollar, but its long-term outlook remains positive. Especially with its growing US and UK operations. It's also got more than $500 million in cash.
- Cochlear Limited (ASX: COH) – Gross dividend yield: 3.26%
Cochlear's dividend yield may not be stand out at first glance, but thanks to its growing international exposure I expect the company to announce a rising stream of dividends over the next five years.
- ResMed Inc. (CHESS) (ASX: RMD) – Gross dividend yield: 2.15%
Like the aforementioned biotech (Cochlear), ResMed is an extremely successful international business which reports profits in US dollars. And what it lacks in trailing dividend yield it makes up for with modest long-term growth potential.
- Telstra Corporation Ltd (ASX: TLS) – Gross dividend yield: 7.84%
Telstra shares have come under significant selling pressure in recent months as investors reacted to its low growth profile and lofty valuation. While I frequently advised readers NOT to buy it at over $6 per share, its price has now fallen back into a more compelling range. Although it's still not a 'bargain' in my book, when it gets closer to $5.00 I'll start backing up the truck.
- Computershare Limited (ASX: CPU) – Gross dividend yield: 3.45%
As another low organic growth but defensive business, Computershare enjoys sticky revenues, market dominance and broad geographic exposure. The company has a solid track record of bedding down acquisitions to grow earnings, but such a strategy brings its own portfolio of risks. Nonetheless, at these prices Computershare looks a buy.
Buy, Hold or Sell?
At today's prices, I'd gladly buy each of these businesses for the long term, with Computershare being the only one which I hold some reservations over. However, with share prices falling and interest rates at record-lows: Dividends are still King.
