Investing in companies in cyclical industries can still be a safe bet for dividends. Stock market corrections and bear markets often create opportunities to buy strong companies at a discount. Even though stock prices may drop during these periods, it doesn’t necessarily mean the company’s long-term prospects have changed.
Three dividend stocks worth considering during a market correction are Caterpillar (CAT), Procter & Gamble (PG), and Home Depot (HD).
Caterpillar, known for heavy equipment, may seem risky due to its cyclical nature. However, its free cash flow generation is strong enough to cover its dividend even in volatile market conditions. The company’s focus on growing its less cyclical services business further strengthens its position.
Procter & Gamble, with a long history of resilience, offers a stable dividend yield. Its diverse portfolio of consumer staples brands makes it a reliable choice for investors looking for steady income. The company has a track record of consistently rewarding shareholders with dividend payments.
Home Depot, although more susceptible to economic slowdowns, has shown resilience in its sales and net income growth. With a focus on long-term growth and a strong balance sheet, Home Depot can continue to raise its dividend even during periods of slower earnings growth. Investors can benefit from its steady passive income and industry-leading position if the stock price falls temporarily.