Bear markets can be an opportunity for those with cash sitting on the sidelines. With stock prices falling more than 20%, dividend yields are surging. And that means you can earn more passive income from money invested amid a bear market.
Three high-quality companies currently offering big-time dividend yields because of the bear market are Verizon (VZ +0.46%), Intel (INTC +2.63%), and Walgreen Boots Alliance (WBA +0.00%). Here's why passive-income seekers should consider loading up on these big-time dividend stocks.
NYSE: VZ
Key Data Points
A cash flow machine
Shares of telecom giant Verizon have tumbled nearly 35% from their recent high. That slump has pushed Verizon's dividend yield up over 7%.
Verizon has an excellent dividend track record. Last month the company increased its quarterly dividend payment by another 2%. That marked the company's 16th straight year of increasing its dividend, the longest in the telecom industry.
The company generates plenty of cash to cover its big-time payout. Verizon's business generated $28.2 billion of cash from operations during the first nine months of 2022, more than covering the $15.8 billion it invested in maintaining and expanding its network. That left it with $12.4 billion of free cash flow, allowing it to fund its $8.1 billion dividend outlay and strengthen its solid balance sheet. The company expects its network investments to drive future growth, which should enable it to continue increasing its dividend.
NASDAQ: INTC
Key Data Points
Multiple funding sources put the dividend on a solid foundation
Shares of semiconductor giant Intel have plummeted more than 50% this year. That has pushed Intel's dividend yield up over 5%.
Intel's expansion plans have weighed on its share price. The company plans to invest $23 billion in capital projects, including constructing several chip manufacturing plants. The company expects its adjusted free cash flow to fall in a range of negative-$1 billion to $2-billion this year as a result. Some investors are therefore concerned that Intel can't afford its dividend, which totaled nearly $3 billion during the first half of this year.
However, Intel has an A-rated balance sheet with $27 billion of cash at the end of the first quarter. It also expects to raise additional money by completing an initial public offering of its Mobileye unit. Meanwhile, the company secured Brookfield Infrastructure (BIPC +0.00%)(BIP +2.98%) as a funding partner for two manufacturing plants. Brookfield will finance 49% of the up to $30 billion needed to build those facilities. Because of these factors, Intel believes it can maintain and continue growing its dividend during this expansion phase.
NASDAQ: WBA
Key Data Points
The transformation is on track
Walgreens Boots Alliance has lost more than 35% of its value this year, and its dividend yield has risen above 5.5%. That's a very attractive payout for a company with Walgreens' dividend track record.
The consumer-centric healthcare company increased its payout for the 47th straight year. That easily qualifies it as a Dividend Aristocrat and puts it a few years shy of the even more elite class of Dividend Kings.
Walgreens is currently transforming from a pharmacy retailer to a consumer-centric healthcare company. It sees its investments in that strategy driving accelerating core growth in 2023. Meanwhile, it expects its earnings per share to build toward a low-teens annual growth rate in its 2025 fiscal year and beyond. That forecast suggests Walgreens should have no problem continuing to grow its big-time payout in the future.
Boost your passive income with these bear market sales
Stock prices are tumbling as investors price in the near-term possibility of an economic downturn. While a recession will affect some companies' ability to finance their growth and dividend payments, it won't affect Verizon, Intel, and Walgreens since they generate lots of cash and have solid balance sheets. They should be able to continue growing their dividends in the coming years. With their stock prices lower and dividend yields higher, they look like attractive options for those looking to take advantage of the bear market to boost their passive income.
