Retirees may have been rattled by the recent surge in inflation and macro headwinds that have made markets a rather uneasy ride. Despite the pressures, stocks have continued with their ascent, with the S&P 500 marching to new heights.
More recently, stocks took an uppercut to the chin as America’s consumer price index (CPI) came in a tad hotter than expected. Undoubtedly, the hotter inflation number fuelled a rather vicious selloff that worked its way through the U.S. markets as well as dragging the TSX Index lower. It was actually quite jarring to see the TSX Index shed 2.3% on the day, as the S&P 500 fell by just shy of 1.4%.
Retirees: Opportunities to buy the dip in sight?
Undoubtedly, the Canadian stock market wasn’t even at new highs before the Tuesday tumble worked its course. In any case, I see the Canadian stock market as abundant with value opportunities. So, if you’re a retiree, I think it makes a lot of sense to construct a watchlist of things to buy if the Tuesday bout of volatility is, in fact, the start of a more extensive sell-off. We’ll never know if this is the beginning of a market correction until after the fact.
As a long-term investor and retiree, though, the day-to-day moves shouldn’t matter. If you’ve got dry powder to buy stocks on the way down, a correction can make the “bargains” you see today that much better.
Of course, such bargains aren’t guaranteed to stick around for a long period of time. So, without further ado, let’s look at one intriguing dividend stock that I think would make for a great fit in one’s nest egg. Though I’d prefer them at lower prices, I’d not be afraid to do just a bit of nibbling today, given today’s prices seem more than fair, in my very humble opinion.
BCE
Just like that BCE (TSX:BCE) stock is right back to trading at $50 and change. With multi-year lows in sight and a 7.81% dividend yield, it’s hard not to want to attempt to reach out to catch this falling knife of a stock, even if it means getting knicked in the short term. The telecom titan has more than its fair share of troubles. The firm received harsh criticism from many, including Canadian Prime Minister Justin Trudeau, following its recent mass layoff.
Undoubtedly, BCE is not the only company out there to engage in job cuts. The tech and financial industries have been in layoff mode for quite some time. And it’s unclear as to when the wave will end, especially if interest rates must remain elevated in response to high inflation, which remains nothing short of stubborn.
Either way, I view BCE’s dividend as worth pursuing if you’re a retiree who wants passive income on the cheap. As to when BCE can step forward and put an end to its brutal selloff remains to be seen. Regardless, retirees who aren’t easily startled by negative momentum ought to at least keep the $45.9 billion income giant on watch.
As BCE looks to sell some of its radio stations, I expect more negative headlines and name-calling from various pundits. Though recent guidance on cash flows was a tad alarming, I’d be very surprised if the firm reduced its dividend payment. Though not impossible, I think the dividend could persevere through tough times.
The bottom line on BCE
The yield is just too towering (and secure) to say no to, even at a scary time like this. While BCE is known as one of those boring safety plays, it’s been anything but in recent years. Though it seems too risky, I’d argue that the reverse is true now that the selling has been so rampant.
