Finance
2 top dividend stocks that I’m not at all concerned about in a stock market sell-off
I own about 40 stocks, and some tend to get into trouble when the market sells off more often than others. But for the most part, I don’t worry much about the underlying businesses of my top holdings. Their stock prices may rise and fall, but I am confident that the companies will continue to make money, pay dividends and execute on their growth strategies.
Here are two of my biggest dividend stocks that I’m not worried about at all during a stock market selloff.
Growth and income, no matter what
Real estate income (NYSE:O) is one of my largest and longest-held stock positions, and for good reason. The company not only has a long track record of delivering market-beating total returns, but has also achieved this with less volatility than the S&P500 and has steadily increased its earnings (and dividends) over time, regardless of what the stock market and economy are doing.
If you’re not familiar with the company, Realty Income is one real estate investment fund which owns approximately 15,500 detached commercial properties in the US and Europe, most of which are occupied by retail or service businesses. There are two main reasons why the company has been such a stable producer over the years:
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Realty Income’s tenants are primarily in businesses that are recession-proof or difficult to disrupt with e-commerce, or both.
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Realty Income tenants sign long-term leases with built-in annual rent increases, and the tenants are responsible for taxes, insurance and most maintenance costs.
The proof is in the execution. Realty Income has generated an annualized total return of 13.5% in the thirty years since listing on the NYSE, and has increased its payout for 107 consecutive quarters, across a range of economic conditions. With a yield of 5.2% and a share price still more than 25% below its all-time high, Realty Income could be worth a look for any long-term investor.
An essential company with a focus on the long term
The stocks I’m least concerned about are the stocks that sell things to people needAnd Markel (NYSE: MKL) is definitely on the list. At its core, Markel is an insurance company offering specialized insurance and reinsurance products. There are numerous uses for specialty insurance, and as a personal example, when I needed umbrella insurance to cover several rental properties, Markel was the company that wrote the policy.
Markel is also unique among insurance companies in that it invests its excess capital in two ways. First, it invests in common stocks and has a multi-billion dollar portfolio. A market sale gives the company the opportunity to put money to work at discounted prices. Markel also invests in early-stage companies through its Markel Ventures business, and this has the potential to create game-changing investment returns for the company.
Markel trades for around 17 times earnings estimates, which isn’t exactly cheap, but an attractive price to pay for this unique insurer. But if the stock were to fall during a sell-off, I would be happy to add more shares in the sell-off.
Your playbook during a market sale
When there is a sell-off in the stock market, the most important thing to avoid is making knee-jerk reactions and pressing the buy or sell button too quickly. I often tell people on days when the market is falling sharply (or when it is rising higher) that “today is a great day to do NothingTrying to time the market is a losing battle, and reacting quickly to general market movements rarely works out favorably.
However, when the dust has settled and prices are still low, it can be a good time to buy shares of excellent companies at a discount. The two stocks I discussed here are just a few examples that I would like to add if the stocks were to fall precipitously by 10% or more without changing how the companies themselves perform.
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Matt Frankel has positions in Markel Group and Realty Income. The Motley Fool holds and recommends positions in Markel Group and Realty Income. The Motley Fool has one disclosure policy.
2 top dividend stocks that I’m not at all concerned about in a stock market sell-off was originally published by The Motley Fool
