Want passive income if markets crash again? I think these are the best shares to buy now!

Paul Summers identifies three stocks that should continue to be great sources of passive income even if markets crash again in 2020.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hand holding pound notes

Image source: Getty Images.

Having a second income stream, particularly one that doesn’t require much effort, is perfectly achievable. As an investor, you simply need to own shares in companies paying dividends. And with another market crash in 2020 not out of the question, I think these are three of the best to buy now.

Market crash winner

Last week’s Q1 revenue update from online trading provider and FTSE 250 member IG Group (LSE: IGG) was short but definitely sweet for those already invested. 

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Thanks to a 50% rise in the number of clients making trades, revenue for the three months to the end of August came in at £209m. That’s a stonking 62% higher than the same period in 2019! While most of this came from core markets such as the UK, EU and Australia, revenue from relatively untapped markets (dubbed ‘significant opportunities’) nearly doubled to £38.2m. 

According to IG, nearly 35,000 new clients placed their first trade in the quarter — 129% higher than in 2019. With markets likely to remain volatile, I can’t see this positive momentum slowing for a while. Even if it does, IG is still worth grabbing for its dividends.

A likely 43.2p per share payout in FY21 leaves the shares yielding 5%. Combine this with a bulletproof balance sheet and this market crash beneficiary still looks very reasonably priced. The shares trade at just 16 times forecast earnings.

Great value

With its counter-cyclical attributes, insolvency firm Begbies Traynor (LSE: BEG) is another stock to hold during tough economic times. Like IG, it also reported to the market last week.

In a statement delivered at its AGM, Executive Chairman Ric Traynor said that the number of new appointments taken on by the company had been “encouraging” and had helped increase its share of the market. Despite being disrupted by the coronavirus, the £120m cap’s property advisory and transactional services business had also managed a “solid financial performance”. Activity levels here are recovering faster than predicted.

Begbies will report its latest set of half-year numbers in December. Since insolvency levels could rise substantially between now and then as the government’s financial support for businesses ends, I think the shares look good value at 15 times forecast earnings.

The investment case becomes even stronger when you consider the dividends on offer. A predicted 3p per share payout in the current financial year translates to a yield of 3.3%.

Targeting income

A final income pick for nervous times is real estate investment trust Target Healthcare (LSE: THRL). It invests in, and rents out, modern care homes. This arguably makes it one of the most defensive businesses you’re ever likely to find on the market.

As evidence of this, Target reported collecting 96% of rent payable for the last quarter back in July. Another positive was that only five of its 71 homes (representing 15 of 4,925 beds) were reporting cases of Covid-19 at the time.

As a REIT, Target is required to return a big proportion of income to its shareholders. In FY21, this will likely be around 6.76p per share. Based on its closing price on Friday, that gives a yield of 6.2%.

When it comes to generating passive income with limited risk, it surely doesn’t get much better than this. Market crash or not, Target presents as a great dividend pick, I feel. Full-year results are due any day.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Paul Summers owns shares of IG Group Holdings. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

A beach at sunset where there is an inscription on the sand "Breathe Deeeply".
Investing Articles

Stock market crash: here’s why falling prices is good news

Over in the US, a stock market crash is battering high-priced stocks. But I see falling shares as an opportunity…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

These 5 FTSE 100 shares crashed in 2022. I’d buy 1 today

Although the FTSE 100 index is flat in 2022, some Footsie shares have crashed hard this year. But I see…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How investors can boost their passive income when the FTSE is falling

Stock markets are plagued with fears right now. Here's why I firmly believe those fears improve our passive income prospects.

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Investing Articles

2 cheap UK shares to buy right now!

Recent market volatility means many top stocks now trade at rock-bottom prices. Here are two cheap UK shares I'm thinking…

Read more »

Rolls-Royce's business aviation engine, the Pearl 700
Investing Articles

The Rolls-Royce share price is just pennies. Am I missing something?

As the Rolls-Royce share price lingers in penny stock territory, our writer revisits the investment case that has attracted him…

Read more »

Compass pointing towards 'best price'
Investing Articles

How to put a valuation on the Woodbois share price

The Woodbois share price has fallen from its recent spike, so should I buy now? And how can I work…

Read more »

Inflation in newspapers
Investing Articles

I’d fight inflation with these 2 FTSE 100 dividend shares

With inflation hitting a 9%, I'm boosting my passive income and turning to these two FTSE 100 dividend stocks.

Read more »

New Ways of Investing - Hands Only Using Smart Phone
Investing Articles

2 cheap Footsie stocks to buy for BIG dividends!

The recent stock market sell-off leaves plenty of top stocks looking too cheap to miss. Here are two great Footsie…

Read more »