This week has seen one of the most remarkable sell-offs in recent history.
Fears of the COVID-19 coronavirus spreading have moved markets into correction territory. This morning, the Dow Jones Industrial Average was down another 1,085 points (4%) in early trading.
It's clear that many institutional investors - already worried about considerable spikes in valuations - have used this period as an opportunity to ditch stocks and move to cash.
Meanwhile, as the United States begins to face the threat of a spread of coronavirus across the country, investors remain in a panic.
Remember, panicking is the worst thing you can do right now. Make no mistake: It's only natural to worry when the markets fall so sharply. But this is the time when maintaining a disciplined investing approach is so important. You can't let emotions drive your decision-making.
One way to maintain that discipline is finding discounted stocks that pay solid dividends. Collecting cash dividends is one of the best ways to offset losses by the broader markets.
And this market correction has driven down the price of many stocks that are still poised to outperform over the long term.
With stock prices falling, dividend yields are becoming more attractive on some great long-term dividend stocks to own. To identify the best dividend stocks to own, we use the Money Morning Stock VQScore™ system, a proprietary model that tells us which stocks are poised to break out in the future.
If you're looking to buy stocks for the long haul, consider these three dividend stocks.
Dividend Stocks to Buy, No. 3
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Fifth Third Bancorp (NASDAQ: FITB) is a major holding company that operates more than 1,150 bank branch locations and nearly 2,500 ATMs around the country. Fifth Third is the 20th largest bank in the country.
While the coronavirus fears have spread across the financial sector, it has created a remarkable "buy and hold" opportunity for investors looking to lock in a stable yield at a time that interest rates continue to fall.
Fifth Third stock has fallen close to its 52-week low. That also happens to be right beside its technical bottom. The stock currently has a VQScore of 4.2, putting it right in our "Buy Zone." At the moment, shares return a dividend of 4.18%.
Meanwhile, the current price target on the stock - 12 years out after coronavirus fears have subsided - is roughly $32 per share. That price target represents a potential upside of 23.7%.
Dividend Stocks to Buy, No. 2
The coronavirus threat has hindered stocks across the board. So even "safe" utilities have taken a hit as a result of the broader sell-off.
Here's the thing: Even if the coronavirus moves across the United States, Americans are still going to need electricity. Utilities remain a safe place to park your money, and we're starting to see a rise in yields thanks to the sell-off.
One of the best to own is Duke Energy Corp. (NYSE: DUK). This Charlotte-based electric power firm currently pays a dividend of 3.9%. That's fantastic given that the Fed is poised to cut interest rates again in the coming months to provide some cushion to the U.S. economy.
Duke Energy has a VQScore of 4.4. We also have a price target for Duke Energy at $110. That represents a potential 12-month upside of 13.3%.
Dividend Stocks to Buy, No. 1
Mall shopping REITs have taken continuous hits over the last year. They were the worst-performing class of REITs in 2019. The combination of the coronavirus, the ongoing struggles of brick-and-mortar retail, and the weakening economic outlooks have driven Tanger shares lower.
Also, the stock was just dropped from one of the top retail ETFs, which caused a flood of selling on the market.
That said, Tanger is one of the best dividend plays at the moment, with the yield currently sitting at a whopping 11.7%.
It's worth noting that the company just increased its dividend, and it has the coverage to ensure payment well into the future. Tanger has the best occupancy rates in the mall operator space. If shares continue to trickle lower, it will become a possible takeover target for a private equity firm or another larger operator.
Shares currently trade at $12.16. With a VQScore of 4.8, we believe Tanger offers a rare combination of double-digit yield with significant price appreciation upside. We're setting a conservative price target of $16 per unit over the next 12 months. That represents a potential upside of 31.5%.
Action to Take: With investors around the world panicking about this week's sell-off, the first thing to do is remain calm. Maintain a disciplined investing approach, and do not let emotion take over. If you're investing for the long term, this is an excellent opportunity to add solid, dividend-yielding companies to your portfolio at a discount.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.