While you might not like what I’m about to say, it’s the truth: A stock market crash or steep correction may be brewing.
Since the beginning of 1950, the benchmark S&P 500 has undergone 38 double-digit percentage declines, equating to roughly one every 1.9 years. Even though Wall Street doesn’t strictly adhere to averages, it’s important to recognize that crashes and corrections are a normal part of the investing cycle.
On the other hand, dips in the market are also an incredible opportunity to pick up high-quality stocks at a discount. While there are numerous investing strategies that can make you richer over time, dividend stocks have a proven track record of outperforming their non-dividend-paying peers. Since dividend stocks are almost always profitable and time-tested, they’re the perfect way to put money to work in a volatile market.
If a stock market crash does occur in 2022, the following four dividend stocks would make for perfect buys.
Bristol Myers Squibb: 3.3% yield
The beauty of most healthcare stocks is that they’re defensive. Because we can’t control when we get sick or what ailment(s) we develop, demand for prescription drugs, medical devices, and healthcare services tends to be remain unaffected by swings in the stock market or broader economy. This provides a steadiness to the cash flow of pharmaceutical stocks like Bristol Myers Squibb.
Beyond just being a high-quality defensive play, Bristol Myers is benefiting from its blend of organic and acquisition-based growth. In terms of the former, the company likely saw blood-thinning drug Eliquis, which was developed in cooperation with Pfizer, surpass $10 billion in sales in 2021. Likewise, cancer immunotherapy Opdivo is being examined in dozens of studies, which offers hope that its label will be substantially expanded in the coming years. Opdivo brought in $7 billion in sales in 2020, and could easily become a drug capable of $10 billion in annual sales over time.
With regard to acquisitions, Bristol Myers landed a whale when it bought cancer and immunology drugmaker Celgene in late 2019. This deal added numerous blockbusters, including multiple myeloma drug Revlimid, which has a rich history of growing its annual sales by a double-digit percentage. Revlimid is protected from a full onslaught of generic competition until the end of January 2026, which provides Bristol Myers with a substantial runway to rake in cash flow from its lead drug.
A price-to-earnings multiple of just eight makes this company a no-brainer buy during any sizable market correction.
Broadcom: 2.6% yield
Though defensive stocks are a fantastic place to put you money to work during a crash, not all growth stocks need to be avoided. In fact, tech heavyweight Broadcom (NASDAQ:AVGO) is a perfect dividend stock to buy if market volatility picks up. Broadcom’s quarterly payout has rocketed higher by more than 5,700% over the past 11 years.
Chipmaker Broadcom’s bread and butter continues to be its smartphone solutions, which includes next-generation wireless chips. The ongoing rollout of 5G wireless infrastructure represents a multiyear opportunity for the company to enjoy higher demand and improved pricing power. After all, it’s been a decade since wireless download speeds were significantly improved, which means businesses and consumers will be eager to upgrade their devices to take advantage of these faster speeds.
What investors might not realize about Broadcom is that there’s a world of opportunity beyond its core smartphone segment. Many of its ancillary revenue channels are growing faster, and will continue to do so throughout the decade.
For example, Broadcom provides solutions used in next-gen automobiles. Everything from driver assist technology to general electronics, such as LED lights, may contain…
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