The Dow Jones Industrial Average is coming off its sharpest drop into a bear market in history this month. The ongoing coronavirus response has effectively shut down the hospitality, travel, and restaurant industries.
Now, these sectors are desperately seeking bailouts while investors experience a wipeout to their wealth.
With that in mind, turning to blue-chip dividend stocks is one way to hedge your portfolio right now. These stocks may pull back with the rest of the market, but any dividend payments will serve as hedges now.
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Today, we're going to discuss three high-yield dividend stocks that offer tremendous upside when the coronavirus passes and we move toward full recovery.
Of course, in this unprecedented situation, many companies may end their dividend payments. That's a fact. But the following three offer some of the safest on the market.
Dividend Stock to Hedge Your Portfolio, No. 3: AbbVie
The biotech sector has pulled back in recent weeks. And – in normal conditions – some of the leading biotech stocks are trading at incredible valuations and offer massive dividend opportunities.
One of the leading "Buy and Hold" options in the sector is Abbvie Inc. (NYSE: ABBV). Shares have pulled back more than 26% from their 52-week high and are now trading at a point that the dividend sits at 6.5%.
This is an incredible dividend level for a company that has some of the market's most important drugs, like arthritis treatment Humira and cancer drugs Imbruvica and Venclexta.
When you see a firm like this trading at a yield that rivals junk bonds, you have to remember that this is a healthy company.
If you're a biotech investor looking for a stable, profitable company that produces medications critical to Americans, AbbVie will be a survivor of this crisis.
Dividend Stock to Hedge Your Portfolio, No. 2: Broadcom
It's unclear how and when the semiconductor sector will recover. But when it does, it's important to have your money in the companies poised to win the race through this crisis.
Dominant players in the tech space like Apple Inc. (NASDAQ: AAPL) will use this opportunity to bolster their market share and streamline their supply chains.
That's good news for suppliers who have strong relationship with Apple and will benefit from next-generation trends like 5G. That puts Broadcom Inc. (NASDAQ: AVGO) right in the heart of the opportunity ahead.
Broadcom will be a survivor of the coronavirus fallout, and when 5G rises it will be in high demand.
The stock also pays a ridiculous yield at the moment of 7.7%, which rivals junk status. But again, this is a solid company.