The ASX share market is having a horror day – the S&P/ASX 200 Index (ASX: XJO) is down by 3% at the time of writing. This means it's down by 5.1% since Thursday.
There is widespread selling across the board.
The Commonwealth Bank of Australia (ASX: CBA) share price is down 3.9%, the Macquarie Group Ltd (ASX: MQG) share price is down 4.5%, the Telstra Group Ltd (ASX: TLS) share price is down 2.3%, the Wesfarmers Ltd (ASX: WES) share price is down 2.6%, the Woodside Energy Group Ltd (ASX: WDS) share price is down 2.9%, and the Westpac Banking Corp (ASX: WBC) share price is down 3.9%.
Investors are worried about the possibility of a recession in the US stock market, and this is having a knock-on effect on confidence for ASX investors. Even Warren Buffett recently decided to sell a huge chunk of Apple shares within the Berkshire Hathaway portfolio.
However, these declines could be a good thing for investors looking at ASX dividend shares.
Why the sell-off is helpful for income investors
One of the most underrated things about investing is that we can decide when to buy shares. We don't have to buy or sell just because the market is moving.
It's always helpful to be able to buy shares at a cheaper valuation because we're buying a piece of a company's earnings for a lower price.
When the share price goes down, we can also buy the ASX dividend shares with a better dividend yield.
If a business has a 5% dividend yield and the share price falls 10%, then the yield on offer becomes 10%. If the share price drops 20% then the yield becomes 6%.
If a company has a 6% dividend yield, and its share price drops 10%, the yield becomes 6.6%. If the share price falls 20%, the yield becomes 7.2%.
I'm certainly not expecting blue-chip stocks to drop 10% or more, but this shows how helpful the decline can be for investors seeking income.
It's possible the ASX share market could fall even further, but we'd need a crystal ball to know what's going to happen next.
Which ASX dividend shares I'd buy
I like the look of several stocks, and I'd be very happy to buy them if I had cash in my brokerage account at the moment.
Some of the sold-off stocks I'd be interested in are KFC operator Collins Foods Ltd (ASX: CKF), farmland landlord Rural Funds Group (ASX: RFF), sustainable innerwear retailer Step One Clothing Ltd (ASX: STP) and diversified building product manufacturer and asset owner Brickworks Limited (ASX: BKW).
