Markets have been very volatile in the last two weeks due to a very high degree of economic uncertainty and fear emanating from the spread of Covid-19 Coronavirus beyond the borders of China. Even though the number of new coronavirus infections are coming down in China, but have been rising in many other countries, including the US. The broader market, as represented by the S&P 500 index, dropped 13% in a matter of a few days. However, the markets got some reprieve this past Monday. On Tuesday, the Feds surprised the markets by a 50-basis point cut in interest rates, a move that was sudden and probably more than expected. The future direction of the markets remains uncertain as it is still anyone’s guess what will be the real impact from coronavirus. If nothing else, markets will remain on edge, and volatility is likely to remain high for the next month or so.
S&P 500 ETF (SPY) six-month chart, courtesy Yahoo Finance
Fortunately, as long-term dividend investors, we need not pay too much attention to the short-term or day-to-day movements of the market. We need to pay attention to the quality of companies that we buy and buy them when they are being offered relatively cheap. The goal of this series of articles is to find companies that are fundamentally strong, carry low debts, support reasonable, sustainable and growing dividend yields, and also trading at relatively low or reasonable prices.
Irrespective of the market's day-to-day gyrations, we remain on the constant lookout for companies that offer sustainable and growing dividends and maybe trading cheap on a relative basis to the broader market as well as to their respective 52-week highs. We believe in keeping a buy list handy and dry powder ready so that we can use the opportunity when the time
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