2 top dividend stocks to buy if the market crashes

It pays to have a shopping list ready in case the market crashes. Roland Head looks at two dividend stocks he’d buy if prices slump.

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Last year’s market crash created some wonderful buying opportunities. With share prices at 10-year lows, I found plenty of attractive dividend stocks to buy.

Although the rapid market recovery has been great for my portfolio, it means I missed out on some bargains. Today, I’m going to look at two dividend stocks I’d really like to buy if the market crashes again.

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Hydrogen and batteries

I’m pretty certain that hydrogen fuel cells and batteries will replace diesel and petrol in most vehicles over the next couple of decades. My pick for exposure to these fast-growing sectors is FTSE 100 group Johnson Matthey (LSE: JMAT).

This industrial group is best known today for producing catalytic converters used in diesel and petrol engines. But the company is now developing the next generation of technology, as it’s done several times before in its 204-year history.

Catalytic converters are still profitable and generate plenty of cash for the group. This is being reinvested in hydrogen and battery development. Unlike many loss-making start-ups, JMAT already has strong relationships with large car manufacturers. The company also has a track record of large-scale industrial production. I reckon it’s in a good position to take the lead on clean technology.

The main risk I can see is that Johnson Matthey will fail to develop the winning products for the next generation of vehicles. This could cause profits to slump for years as the firm tries to catch up.

Personally, I’m willing to back this company’s long history of successful innovation. I see JMAT as an ideal dividend stock to buy for long-term exposure (and income) from clean power technologies.

A safe dividend stock to buy in uncertain times?

Johnson Matthey’s future relies on the company developing the right products at the right time and it may not be easy.

However, I reckon things are a little simpler for my second company, Domino’s Pizza (LSE: DOM). This business knows what its customers want and how to make it.

Domino’s traded well last year, for obvious reasons. Sales rose by 11.4% to £1,348.4m, while pre-tax profit rose by 2.5% to £101.2m. Profits would have been higher, but the company spent £9m on Covid-19 costs, such as PPE and cleaning, to help support its franchisees.

The main challenge for this FTSE 250 group is to find ways to sell more pizzas to more people. That’s become an issue in recent years. The company has clashed with its franchisees — who own and run its branches — over costs and plans for new openings.

Fixing this dispute would be a big win for CEO Dominic Paul. After a long period of stalemate, the company said in March it had tabled a new offer “in an attempt to reset” the relationship. There’s no word yet on progress, but as far as I can see it’s in everyone’s interest to get a solution. So I’m hopeful.

In the meantime, Domino’s share price has risen by 30% over the last year and by 60% over the last two years.  This has left the stock trading on 20 times forecast earnings, with a dividend yield of 2.5%. I think the shares are probably up with events for now, but this is a dividend stock I’d been keen to buy on any market dips.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Dominos Pizza. 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.

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