EC 7 Dividend Stocks That Are Suddenly Bargains

Photo credit: Richmond 9

Bear markets aren’t a lot of fun to live through. In fact, I’m actually losing a little sleep over the current one. For whatever reason, this bear market just feels nastier than some of the others I’ve been through.

But the nice aspect of a bear market is that dividend stocks you might normally have considered too expensive to buy suddenly look like a bargain. If you’re brave enough, you can buy your favorite dividend stocks at bargain basement prices and effectively “lock in” very solid dividend yields.

I have to write “lock in” in quotation marks, of course, as there is really no such thing as a guaranteed dividend. Dividends can get cut in a hurry, and an exceptionally high yield is often a prelude to exactly that. So, common sense rules apply here. We’re looking for quality companies that are suddenly a bargain, not cheap garbage that gets cheaper.

So, with no more ado, let’s take a look at seven dividend stocks that have gone on sale of late. I would consider all of them viable options for a diversified dividend portfolio.

StoneMor Partners (STON)

There is nothing certain in life but death and taxes. Well, Stonemor Partners (STON) seeks to profit from the first and avoid the second.

That needs a little explaining: StoneMor is a publicly-traded cemetery. And while that might be somewhat morbid, it’s a fantastic business model. Funeral and burial services (including cremation) are unavoidable expenses, and not ones that heirs are likely to skimp on. Furthermore, with the aging of the baby boomers, business is about to get kicked into overdrive. The number of annual deaths in America is expected to grow by about 80% between now and 2035, meaning that StoneMor has two decades of growth practically baked in.

We’ve covered death; now for taxes. StoneMor is structured as a master limited partnership (“MLP”), a structure that is somewhat rare outside of the oil and gas sector. Being an MLP means that StoneMor is required to pass on nearly all of its profits in the form of distributions in order to escape taxes at the company level. As a result, StoneMor pays a fat yield of just over 10%.

Despite its low-volatility business, StoneMor has been a high-volatility stock. Its price has sagged from more than $32 to just $26.25 today. Don’t sweat it; this is the sort of volatility that comes with the turf when you buy smaller-cap stocks. Just keep cashing the distribution checks, and ride out the price swings.