Today, I have two safe dividend stocks to recommend to you
for a possible market pullback now that it’s climbed all the way back to
all-time highs. Because in the short term at least, it’s crucial to have some
safety in your portfolio…
We don’t know what is going to happen. This year is a
perfect example of that fact. Who knew that the year 2020 would thrust the
country and the world into the throes of a pandemic that would force us into
our bunkers and crash the economy? Didn’t see that coming?
And the market just loves it. Sure, there was a violent
selloff in the early days. But stocks have come all the way back. In fact, the
S&P 500 just made a new all-time high. The index is reflecting a market
that seems to think things are better now than before the pandemic ever
happened.
How can that be?
The market isn’t stupid. And it usually gets things right.
The market is forward looking. It looks six to nine months into the future. In
that span, it sees a rapidly recovering economy drowning in Fed stimulus and
record-low interest rates, with money having no place else to go but stocks to
fetch a decent return.
The market is looking past the virus to a very positive
environment for stocks. While the economy will not be back to pre-pandemic
shape for a much longer time, things will be going in the right direction.
Besides, we got the long overdue bear market and recession over with and now
the Fed is friendly.
I hope that turns out to be right. And I believe in the U.S.
economy. It almost always proves stronger and more resilient than the negative
media reflects. It is also true that the market indexes have been driven higher
by the amazing performance of technology stocks, as business has largely been
even better for the sector during the pandemic. But many stocks and sectors are
still beaten down and are more reflective of the current realities on the
ground.
I also believe that we are in a longer-term secular bull
market. In the grand scheme of things, this pandemic will fade and stocks will
continue to perform strongly. But the near term is looking awfully dicey.
There’s an awful lot of risk out there for a market at all-time highs.
Who knows what the virus will do? There could be a second
wave that is worse than the first. The market seems confident that a vaccine
will be coming in the quarters ahead. But that could prove to be wishful
thinking. Then there’s the presidential election. Elections always inject
unwanted uncertainty into the equation, but this time it’s worse. There is a
risk of an uncertain or contested outcome in November that could wreak havoc on
the markets.
I’m by no means a gloom-and-doomer. I just think that under
the current circumstance it is prudent to eye some relatively safe dividend
stocks with businesses that will continue to thrive regardless of the course of
this virus or who’s elected President. Here are two to consider.
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