3 dividend stocks to buy in a market crash

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) may be up more than 1% heading into the close today, but is still down 0.8% for the week.

And in the past month, the index has dropped more than 4%, and year-to-date has gone precisely nowhere.

However, at the start of this year, we saw the market sell off by around 10%, before recovering to reach new highs in early August, before sliding again. It’s certainly been an interesting ride so far in 2016.

But the market could slide further from here, with fears over the US raising interest rates and a slowdown in China primary concerns.

Here are 3 dividend stocks you might want to own should the market crash…

Wesfarmers Ltd (ASX: WES)

Conglomerate Wesfarmers may not look cheap with the share price at $43.08 and on a P/E of around 21x. But what the group has going for it is Australia’s second-largest supermarket group Coles, the best DIY hardware brand in Bunnings, not to mention a revived Kmart, Officeworks humming along and several other divisions that generate earnings growth. Currently paying a dividend yield of 4.3% – fully franked, Wesfarmers is a core dividend stock.

Retail Food Group Limited (ASX: RFG)

We’ve long sung the praises of this hugely diversified franchise manager with brands like Crust Pizza, Pizza Capers, Gloria Jeans, Michel’s Patisserie and Brumby’s Bakery for its strong growth in revenues and net profit over the years. A forecast 20% increase in net profit after tax for the 2017 financial year should see the current fully franked dividend yield of 3.9% rise, and we love the growing offshore earnings.

Lifehealthcare Group Ltd (ASX: LHC)

Lifehealthcare offers a cheap P/E ratio of ~11x and a dividend yield of 6.3% fully franked. The distributor of medical devices, implantable devices, prostheses and a vast array of consumables. No matter what the economy is doing, people will still have surgery if they require it and Lifehealthcare appears to have the defensive qualities needed to survive during a market crash. In fact, if shares fall further, it could be the perfect time to jump in.


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Motley Fool writer/analyst Mike King owns shares in Wesfarmers and LifeHealthcare. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has a position in Retail Food Group. 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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