The ASX market crash is back: 3 bargain dividend stocks

Credit: Alon

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is ‘crashing’, according to the financial press, following selloffs on international markets overnight.

The Dow Jones ‘plunged’ 2.2% because investors fretted the consequences of more than decade-low oil prices, according to The Washington Post.

Meanwhile, the S&P (S&P 500) is “in correction” territory, according to CNBC

Ah, nothing sells a digital newspaper subscription like a good ol’ market crash.

Indeed, mum and dad investors experience a little volatility in their share portfolios – panic – and then seek out the guidance from ‘those in the know’ to find relief. So often they find nothing but sharks.

Now, I’m not going to pretend I have a special insight into the latest ASX sharemarket crash, which could save you thousands because, frankly, the ASX will crash. It could be today. It could be next week. Or maybe we’ll have to wait until 2020. Let me explain…

Loosely speaking, market crashes occur every seven to nine years, on average. Therefore, as a long-term investor, with many years until I retire, I’ve realised it’s inevitable I’ll experience my fair share. So I’ll be investing in spite of market crashes – not in their absence.

Indeed, any money I invest in the sharemarket today I truly believe I won’t need for at least three years, so it does not bother me if I buy shares today and they fall 30% tomorrow.

And if I hold shares of great businesses, which are growing fast and paying reliable dividends, I’ll firmly believe I’ll still make many times my money over the long-term in spite of a few market crashes.

3 bargain dividend stocks

So when the ASX falls, I look to buy some quality dividend-paying shares at great prices for the long-term. I don’t see volatility, be that 5%, 10% or 30% share price falls, as risk, but as an opportunity.

Sure, even the best companies will take a beating during a market crash — until market conditions improve.

Take the quality food franchise store business, Retail Food Group Ltd (ASX: RFG) as an example. It’s the owner of Gloria Jean’s, Donut King, Pizza Capers, Brumby’s Bakery, Crust Pizza and much more.

Retail Food Group’s earnings would be hurt if we had a recession or a severe market crash. But five years from now, I suspect they’ll sell more skinny lattes, margarita pizzas and glazed donuts than they do now, and probably at better profit margins.

Therefore, in my eyes, the 7% fall in Retail Food Group’s share price so far in 2016 is an opportunity to buy a great long-term business at a great price. It certainly doesn’t make it a sell — I’d have to see a material change in the underlying business before I’d do that.

Another two dividend stocks that appear to be becoming better buys with every passing day are Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES). Both businesses are growing modestly, have recurring revenue, pay excellent dividends and boast strong balance sheets.

Of course, there’s a risk that any company listed on the sharemarket will go bust, but the probability of these three companies going out of business appears pretty low in my opinion.

Foolish takeaway

The way I see it, the market could crash at any time, so I make sure I’m prepared for it by maintaining a healthy personal cash balance (at least enough to cover six months of living expenses) and have a little extra in my share portfolio to capitalise on down days, like today.


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Motley Fool writer/analyst Owen Raszkiewicz owns shares of Retail Food Group.

Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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