Coronavirus has now taken hold of India by its neck. As of now, the country has reported 873 total confirmed cases till today (March 28) following a spike, with 19 dead. Now the whole country is under lockdown. The coronavirus pandemic has a huge impact on the Indian stock market which has halted a couple of times in recent days when the domestic indices – Nifty & SENSEX hit their 10 per cent lower circuit levels. It is not just in India but the whole Asian market is in absolute turmoil as the COVID-19 pandemic wreaking havoc around the world.
Many investors convinced to not investing in stocks amid the coronavirus instead ready to pull everything out of the market until things don’t return to normal. Investors who are holding heavy equity-based investment portfolio have witnessed a substantial loss in value in the last couple of weeks. But, other investors aren’t panicked from the situation and not selling-off their stock position. On the contrary, they are looking to identify the stocks that are available at great discounts and can benefit them in making large profits over time.
In doing so, they once again turn to the dividend stocks.
Why Dividend Stock is the Hot Choice?
Investors are now once again luring to invest in dividend stocks as the dividend stocks tend to be a great investment option to have consistent income in near-term especially when the returns from the equities are at risk. It is because the dividend stocks are quality stocks of large reputable companies that have a sustainable business model, strong balance sheet, a long track record of dividend payouts, and rising cash flows that can provide with a non-taxable passive income without selling-off the shares.
Additionally, these companies have strong fundamentals which very unlikely to become a victim of high volatility in the market, and thus consider best for long-term investments. Besides, investors have this believe that dividend stocks tend to outperform the growth stocks in the long-term. Well, truth to be told, it is witnessed on several different circumstances in the past.
By now you must’ve got the idea: Dividend stocks are almost profitable and poised to survive whatever the disruption is thrown to their way. With the coronavirus outbreak, many dividend stocks are available at discounted prices and considered safe-haven for investors as the companies will highly likely to recover from this recession when the market turns which will result in both ways:
First, benefit from short-term consistent cash flows in the form of dividends and second, appreciation in stock value over-time once the bullish sentiment starts flowing in the market. The Indian market has now in an extended period of panic, it is the right time to buy shares. However, investors must be prepared for immense volatility shortly as the situation is not under control and the country is making preparations for phase 3 of coronavirus pandemic.
Also, you cannot take it granted that dividend stock will surely benefit you in the long-term as the bottom of the market is not yet found. And let’s be honest: most of us believe that the market will continue to fall. We don’t know how the stock will behave in the future? They may rise or fall even more. But, it’s a mistake to wait for them to fall. The stocks are already at discounted prices. Aggressive buy during such a crisis can help in making profits and building wealth to achieve long-term financial goals.
However, to ensure you don’t fall prey of the volatility you should make some tough decisions like you don’t know how long this lockdown will be? – So, it is important to have some cash on hands before making new investments as your forthcoming investments will not much of any benefit in short-term. Because any money you will invest right now will be locked away for years to achieve the future financial goals. And if you have investments in the market then please don’t sway by your emotions and hold on to your investments unless if you have an immediate need of cash.
Investing in dividend stocks in the current market dip can address your long-term goals and need for cash in short-term. But, be careful!