- As yields become less and less attractive and US Treasuries continue to pay next to nothing, investors are left scrambling to find ways to defend their investments.
- The fear-driven, global sell-off caused by the Coronavirus will temporarily create some extraordinary opportunities for investors in it for the long haul.
As fears of the continued global spread of the Coronavirus (COVID-19) continue to drive financial markets to new lows, savvy investors should take note of the excellent opportunities that this massive global sell-off is creating.
The World Health Organization on Coronaviruses:
“Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV).
Coronaviruses are zoonotic, meaning they are transmitted between animals and people. Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death. A novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.”
The coronavirus that has the world in fear is a novel coronavirus (nCoV), with the Center for Disease Control (CDC) now referring to it as the coronavirus disease 2019 or COVID-19. This coronavirus, Covid-19, is not the same as coronaviruses common among humans (like the common cold), and tends to produce very severe and painful symptoms, and in the most severe cases, even death.
A Silver Lining for Income Investors
The fear-driven, global sell-off caused by the Coronavirus will temporarily create some extraordinary opportunities for investors in it for the long haul.
With that said, there has been a massive transition of money in the past few months as investors attempt to find safe-havens for their wealth. As yields become less and less attractive and US Treasuries continue to pay next to nothing, investors are left scrambling to find ways to defend their investments. In light of this global sell off, investors should reflect upon one of the single most important principles of investing; buy low and sell high.
In Durig’s opinion, there are an abundance of blue chip companies paying historically strong, and even growing dividends, companies that are simply being temporarily and indirectly subjected to impacts of the sell-off created by the Coronavirus.
Blue Chip Dividend Payers Offer Peace of Mind in Uncertain Times
Given the present depth of this global sell-off, selling high is not an option. That said, many large, blue chip, dividend payers have seen their stock prices decline significantly since the sell off began a few months back.
Blue chip companies tend to be very large and reputable, established firms with a robust history of consistent growth and stable earnings, and historically, have consistently proven their resilience to recover from market downturns and sell-offs.
Ben Kirby, of Thornburg Investment Management, describes how he rides out significant periods of market volatility and sell-offs in an interview with CNBC:
To hedge against a possible recession in the next two years, Kirby is sticking to stocks that pay investors while they hide out:
“I like dividend-paying equities. To me they’re one of the most attractive asset classes today, because hands you win, and tails you don’t lose too much,” Kirby said. “If stocks keep going up, your dividend-paying stocks will participate in that and … if stocks decline and we do go into a recession, then your dividend-paying equities can be defensive.”
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Once the dust settles and markets have found their bottom, Durig believes it could be an excellent time to pick up temporarily mispriced, blue chips paying reliable dividends as high as 5-6%, many of which can be found in Durig’s Blue Chip Dividend Portfolios.
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