Nobody wants to see their stock portfolio plummet, but bear markets provide long-term advantages to investors, especially those seeking passive income.
When stock prices fall, dividend yields rise, giving investors a better return for their buck.
Remember to concentrate on investing in higher-quality stocks; here are two blue chips that you should buy now.
Semiconductors are the basic components of technology, tiny chips that enable devices such as computers and automobiles to function. Intel (INTC) is a multinational semiconductor company. It created x86 processor chips, one of the world’s most widely used chip architectures, and owns 63% of the market share worldwide.
Intel has paid and increased its dividend for the past eight years, offering investors a 4 percent yield at this time. Its dividend payout ratio is just 58%, so it’s not a significant financial burden.
The stock is currently trading at a price-to-earnings ratio (P/E) of 10, which is lower than its median P/E of 13 over the previous decade. Intel’s prospects look good; the company is pouring billions into increasing chip production in the United States, positioning it to become a leader in the industry.
Analysts predict Intel’s earnings per share (EPS) will rise by 7% each year over the next three to five years, allowing for additional dividend hikes.
2. 3M Company
Consumers are rarely aware of the numerous small elements that go into producing products on store shelves. 3M Company (MMM 0.49%) produces many of them; it generates over 60,000 items including window film, Post-it notes, and respirator masks.
Because of its excellent brand and a wide range of goods, the company has become a dependable dividend stock; it has paid out an annual dividend for 65 years, making it one of the few remaining active Dividend Kings. Today’s investors may get a 4.6% return with a healthy 67 percent payout ratio.
3M is expected to grow at a rate of around 10% per year over the next three to five years, according to analysts.
The company’s industrial roots may make it susceptible to a recession, but management has managed several economic situations to preserve dividends and is positioned to continue. The firm presently has $3.3 billion in cash and a leverage ratio of just 1.9 times EBITDA (earnings before interest, taxes, depreciation, and amortization). Investors can sleep well knowing that they own this established blue-chip stock. Against its ten-year average of 20, the share price sells at a P/E ratio of 13.