As investors, we should try to benefit from the opportunities the market offers us. One of which, in my opinion, is to buy stocks cheaply during a market downturn.
Investors shouldn’t buy just any cheap stock; the idea is to focus on good companies with solid track records, and hold those stocks over the long term (in the short run, anything can happen).
Let’s look at two solid dividend stocks investors can consider buying during such times.
First up is Singapore Exchange Limited (SGX: S68) or SGX. For those unfamiliar with the company, SGX is the only stock exchange in Singapore.
There are a few reasons to keep SGX under your watch. For starters, it’s the only stock exchange in Singapore, so its services will always be needed as long as the equity market continues to exist. This also allowed the company grow its revenue and net profit by 23% and 13%, respectively, from from 2014 to 2018.
Moreover, SGX has a good track record of paying dividends over the years. In the last five years alone, SGX has paid a dividend every year. Not only that, but its dividend per share has grown from S$0.28 in FY14 to S$0.30 in FY18.
Oversea-Chinese Banking Corp Limited
Next is one of our local banks, Oversea-Chinese Banking Corp Limited (SGX: O39).
Similar to SGX, there are many good reasons to like OCBC as a dividend stock.
For one, it has a solid track record of growing its business over the long term. From 2008 to 2018, OCBC’s total income grew from S$ 4.4 billion in 2008 to S$9.7 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.7 billion in 2008 to S$4.5 billion in 2018. The former was up by 120%, while the latter was up by 164% during that period.
The strong financial performance has translated into strong dividend growth over the years. In the same period, not only has it paid a dividend every year, it has also grown its dividend per share from S$0.28 in 2008 to S$0.43 in 2018. In other words, the dividend was up by 54% during the period.
Although past performance is no guarantee of future result, we think OCBC has positioned itself well to capitalise on the next wave of growth, both regionally and digitally. Thus, there’s a good chance it will at least sustain its current profitability.
As investors, we don’t wish for market downturns. Yet, we can prepare ourselves to benefit from such market behavior by buying good dividend stocks when they’re on sale.
Personally, I think SGX and OCBC are worthy of consideration for conservative investors for the various reasons mentioned above.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended the shares of Singapore Exchange Limited and Oversea-Chinese Banking Corp Limited.