The best time to buy stocks is when everyone else is afraid to embark. Of course, it’s easier said than done, as not all stocks recover from deep price declines. And the reason (or reasons) behind the price cut can also complicate matters.
Current, S&P500 Index We are in bear market territory, with many blue chip stocks falling. Investors are concerned that rising interest rates to combat abnormal inflation could lead to a recession. Short-term traders are feeling a lot of pressure.
But if you’re a long-term investor, a bear market is an opportunity if you know where to look. Bear markets will eventually come to an end (they always do) and smart investors will benefit from buying and holding shares in blue chip companies that are currently trading at discounted prices. I can.For example, long-term investors may Bank of Montreal (BMO -0.97%) When Franklin Resources (Ben -3.06%) at this bear market. These two financial institutions have real profit potential.
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1. Bank of Montreal: Ready to Hit
Bank of Montreal, or BMO as it is more commonly known, is a Canadian bank with exposure to both its home country and the United States. Canada is known for having a fairly closed and conservative banking market. Therefore, BMO, one of Canada’s largest financial institutions, is unlikely to lose its position in the markets it serves as Canadian regulators more or less shield industry leaders from actual competition. This means it has a solid core business in the domestic market which accounts for around 60% of its net profit.
At the same time, Canada has not shown particularly robust growth, at least in part due to all regulations. This points to a country where BMO can still grow and has agreed to acquire Bank of the West in late 2021. Overall, the company is the eighth largest bank in North America.
But the really big story is the company’s Tier 1 capital ratio, which sits at 15.8%. A higher number is a very good indicator of a bank’s readiness to deal with business headwinds. BMO is therefore a banking stock with a solid core for recession. You can also get his all-time high dividend yield of 4.7% until the financial storm subsides. Also note that BMO has paid dividends longer than any other Canadian company, paying dividends for 193 consecutive years.
2. Franklin’s Resources: This shall also pass
Next is Franklin Resources, an asset management company. Its current yield is around a historically high 4.9%. A Dividend Aristocrat that has increased its dividend significantly for 42 consecutive years. That’s good news, but keep that in mind.
Franklin Resources’ business is directly tied to stock market performance in two ways. First, they charge a fee to monitor other people’s money. Since the value of assets under management rises and falls with the market, in today’s bear market, less assets to manage means less returns. Then there is investor sentiment, with investors often pulling out of the market during recessions, further reducing Franklin Resources’ assets under management.
The company’s third-quarter fiscal 2022 earnings were $0.50 per share, down 26% from the same quarter in 2021. higher yield). But even at that low level, quarterly earnings easily covered the $0.29 per share per quarter dividend. In fact, despite the headwinds, the payout percentage remains stable around 60%.
And given the base model here, Franklin Resources’ business should improve rapidly if the market picks up again as history shows. The market has experienced massive ups and downs over the past 40-plus years, but that hasn’t derailed Franklin Resources or its dividend.
Opposing Views Can Be Profitable
Going retrograde on Wall Street is no easy feat, but sometimes you can find the best opportunities just by doing so. Now, the Bank of Montreal is bracing for recession and offering great yields. This is a good combination for patient dividend investors. Franklin Resources, on the other hand, has been slammed into a bear market, which rivals the course of this successful asset manager. can do.
