It's raining gold. That's probably how Warren Buffett would summarize the stock market crash. Buffett wrote to Berkshire Hathaway shareholders in 2010: "Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble."
The problem for many investors, though, is that they don't exactly have a big bucket. Don't worry if you're in that group. Even if you don't have a ton of cash, it's still a very good time to buy stocks if you're prepared to hold them over the long run.
I think it's an especially opportune time to invest in strong dividend stocks with yields that soared as the market sank. If you have $1,000 to invest, here are three great high-yield dividend stocks to buy right now.
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1. AbbVie
AbbVie (ABBV 0.89%) belongs to an elite group of stocks known as Dividend Aristocrats. These stocks, all of which are members of the S&P 500, have increased their dividend payouts for at least 25 consecutive years. AbbVie easily surpasses that threshold, with a sterling track record of 47 years in a row of dividend hikes. Its dividend currently yields a little under 7%.
Many investors would be perfectly content to just receive a 7% return each year. The good news is that AbbVie has pretty good growth prospects to go along with its mouthwatering dividend.
The big pharma company launched two new immunology drugs last year, Rinvoq and Skyrizi, that should become megablockbusters within the next few years. Sales for its cancer drugs Imbruvica and Venclexta continue to soar.
There's one big knock against AbbVie: Its dependence on Humira, the company's top-selling immunology drug that's already losing market share in Europe and will face biosimilar competition in the U.S. in three years. However, AbbVie's other products and pipeline candidates along with its pending acquisition of Allergan should offset the sales losses for Humira and keep the drugmaker's great dividends flowing.
2. Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (BIP 2.21%) doesn't have the long history of dividend increases that AbbVie does. But its dividend yield of close to 5.6% is very attractive. So is the fact that the company has boosted its dividend by 52% over the last five years.
Another big plus for Brookfield Infrastructure Partners is its diversification. The company owns lots of different kinds of infrastructure assets, including cell towers, data centers, electricity transmission systems, natural gas pipelines, ports, and railroads. Brookfield's biggest sector is utilities, but it contributes a little under one-third of the company's total cash flows -- a great sign of how diversified the company is.
You'll also probably like the financial stability that Brookfield Infrastructure offers. The company takes a conservative stance with how much debt it takes on. And roughly 95% of its total cash flows are regulated or contracted.
Brookfield Infrastructure likes to refer to itself as a "grow-tility" that provides investors both security and growth. This growth comes from a continual reevaluation of assets, with the company selling off lower performers to invest in assets that have a better chance of outperforming. Wall Street analysts agree that the company will deliver solid growth with consensus projections of average annual earnings growth of nearly 8% over the next five years.
3. Chevron
Chevron (CVX 1.20%) has been a favorite for income-seeking investors for a long time. And with a dividend that currently yields close to 7.5%, it should still be a favorite.
The entire oil and gas industry has been hit hard by the reduced travel caused by the coronavirus pandemic. To make matters even worse, an oil price war initiated by Russia wreaked havoc on oil stocks.
But if there's any company that's prepared to emerge a winner from a period of lower oil prices, it's Chevron. The energy giant has a strong balance sheet. It hasn't been spending aggressively like some in the industry have. In light of the current challenges, Chevron is reducing its capital spending by 20% and suspending its share buybacks to conserve cash.
If you think that oil prices will stay at current levels for a long time, it makes sense to avoid all oil and gas stocks. However, travel will pick up as the numbers of COVID-19 cases begin to decline. No one, including Russia and Saudi Arabia, wants the oil price wars to go on indefinitely. Sooner or later, oil prices will rebound, with Chevron benefiting. In the meantime, investors who buy the stock will enjoy a juicy dividend yield.
