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Raise Your Portfolio Quality With These 6 Blue-Chip Dividend Stocks

Mar. 11, 2020 9:01 AM ETCAT, CONE, DIA, EPD, QQQ, QSR, SPY, UBA, UBP, UBP.PH, UBP.PK, VZ, QSR:CA11 Comments

Summary

  • The combination of the near-pandemic spread of COVID-19 and the newfound oil price war between Saudi Arabia and Russia has battered stocks, causing a ~15% correction in the last month.
  • It is not clear that either issue will resolve quickly or easily, and neither is it clear how helpful fiscal or monetary stimulus will be to the underlying economy.
  • These six high-quality dividend stocks are the baby that has been thrown out with the bathwater, now offering wonderful starting yields at low valuations.
  • Included in the list is a telecom giant, a high-yielding midstream natural gas MLP, a fast food franchisor, a producer of construction equipment, a data center REIT, and a shopping center REIT.
  • Cheers to those of you who took my advice last year and held back a decent cash position to deploy in times like these.

The spread of the coronavirus, along with the mounting oil price war between Saudi Arabia and Russia (and, to a lesser extent, American shale companies), has wreaked havoc on the stock market. The S&P 500 (SPY), Nasdaq (QQQ), and Dow Jones Industrial Average (DIA) are down 15-17% from where they sat just a month ago.

ChartData by YCharts

Both the virus and the oil price rout have turned out to be much worse than many assumed even a few weeks ago. And neither appear to be letting up in the foreseeable future. On Tuesday, Saudi Arabia announced that they would be ramping up oil production with the belief that sustained low oil prices will hurt Russia more than them. Meanwhile, the Russians claim to be prepared to hunker down and endure this oil price war.

This will unavoidably lead to a wave of bankruptcies in the exploration & production sector of the American energy industry, with perhaps 15-25% of companies going bankrupt or being forced to restructure. Weaker players will likely be acquired for pennies on the dollar by stronger players. And what about other unstable, oil-dependent countries like Venezuela and Iran? It wouldn't be surprising to see some geopolitical turmoil arise related to these countries in the relatively near future.

Will the Trump administration provide a bailout for American oil & gas producers? Perhaps. That would provide some relief for severely beaten down energy names. But low-cost (or zero-interest) loans can't fix oil prices in the $30s. The more likely result would be to create more zombie companies and delay the bankruptcy/restructuring process.

What about the virus? Is there light at the end of the tunnel yet? Here is how the advance of the coronavirus looks as of the afternoon on Tuesday, March 10th (new cases and deaths as of the last 24

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

This article was written by

Austin Rogers profile picture
14.63K Followers
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.

I write about high-quality dividend growth stocks with the goal of generating the safest, largest, and fastest growing passive income stream possible. My style might be called "Quality at a Reasonable Price" (QARP) in service to the larger strategy of low-risk, low-maintenance, low-turnover dividend growth investing. Since my ideal holding period is "lifelong," my focus is on portfolio income growth rather than total returns.

My background and previous work experience is in commercial real estate, which is why I tend to heavily focus on real estate investment trusts ("REITs"). Currently, I write for the investing group, High Yield Landlord.

Analyst’s Disclosure: I am/we are long VZ, EPD, QSR, CONE, UBA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may initiate a long position in CAT over the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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