What’s the best way for investors to react to a stock market crash? In my opinion it’s to sniff out shares with bright profit outlooks and strong balance sheets that have been oversold in the commotion.
As a long-term stock investor myself, the recent stock market crash hasn’t given me reason to panic. I’m confident that the volatility of recent weeks won’t put too big a dent in my overall returns. Market crashes are nothing new and studies show that, over a long-term time horizon, their impact on investor profits tends to be ironed out.
In this piece I’d like to talk about several dividend-paying stocks I’m thinking of buying for my Stocks and Shares ISA following recent price falls.
Passive income stocks: our picks
Do you like the idea of dividend income?
The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?
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In rude health
Dechra Pharmaceuticals might not pay the biggest dividend out there. After the stock market crash it yields a modest 1.5%. But I’d buy it on the back of its ultra-progressive dividend policy, one that has seen annual payouts more than double during the past five years.
This particular healthcare stock has a very bright future in front of it. The animalcare market is one of the sector’s fastest-growing segments as people spend more and more money on their pets. Rising meat consumption means that Dechra can expect drugs demand from the farming industry to keep rising too.
If you’re looking for pharma stocks with bigger yields then you might want to give Alliance Pharma a spin instead. The forward reading here sits at 2.2%, and there’s one advantage it has over Dechra. It acquires and sells drugs that have already passed the testing process, meaning that it doesn’t have to worry about costly development setbacks.
This isn’t the only one string to Alliance’s bow however, the business also boasting considerable distribution, wholesale and retail operations. With the world on the cusp of a painful and possibly prolonged economic downturn, healthcare firms like this could be considered some of the best UK shares to buy right now.
Buying after the market crash
There are many other terrific dividend-paying stocks to be bought following the stock market crash. Water supplier United Utilities won’t be expecting demand for its services to recede during the upcoming recession. And this FTSE 100 business carries a mighty 4.5% dividend yield for this year.
The predictable nature of defence spending, meanwhile, means that QinetiQ and Ultra Electronics are also rock-solid stocks to buy after the market crash. Forward dividend yields here sit around the 2.5% marker. I’d also be tempted to buy food manufacturers for their obvious safe-haven qualities. Sausage casings maker Devro carries a gigantic 5.2% dividend yield for 2020, for instance.
The recent stock market crash was particularly colossal. And there could be another one just around the corner. But this is no reason for investors to stop building their portfolios. If you want to get rich from share investing you need to use recent price falls as a buying opportunity. And I’d start with some of the stocks discussed here.
