Why I’d buy dirt cheap income shares for a 2024 stock market recovery

I’m on the lookout for cheap long-term income shares. And never mind what the bears say, I don’t want to wait until it’s too late.

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Why do people worry about a new stock market crash, when we’ve barely recovered from the last one? If I focus on fear, I reckon I could miss some great chances to buy cheap income shares right now.

I say never mind those sourpusses predicting a US market crash. So what if the S&P 500 is overvalued? That doesn’t say anything about the FTSE 100, which is well below its long-term average price-to-earnings (P/E) ratio.

Sure, if America shudders, we’ll almost certainly shake too. But if it should happen when UK income shares are already cheap, we could buy them even cheaper!

Value shares

Didn’t billionaire investor Warren Buffett once say that “Price is what you pay, value is what you get“?

So if the price of something I want represents good value now, I’ll buy it. And I’ll rarely wait in the hope of better value later.

I mean, those of us sitting on our cash waiting for the next stock market crash might feel a bit silly if the next few years bring us a sustained recovery instead.

Bare cupboards

As well as getting shares at good value, I think we can score another big plus if we buy in the early recovery days after a crash.

All those companies that were overstretched during the previous bull run… well, their cupboards will be laid bare.

We can see all the ones that have built up big debt and were only just managing to handle it. The worst offenders will often have gone bust. And others might have had to restructure to survive, and can look a lot leaner and fitter after a slump.

Rises and falls

The saying that “a rising tide lifts all boats” really does describe the stock market. When profits and cash are rising, we often see weaker stocks gaining along with the strong ones.

But when the tide goes out, that’s when we see the ones that are left high and dry. And now, with what looks like a new recovery under way, I think it helps me focus more on the best quality stocks.

Record income

Forecasts suggest that in 2023, FTSE 100 dividends will come close to the all-time record set in 2018. And they reckon they should smash through it and set a new high in 2024.

Analysts also seem to think bank dividends could beat their all-time peak set in 2007. And that was before the great banking meltdown. Wow!

New bull run

To me, all these signs suggest we really could be at the start of a sustained stock market recovery in the UK.

I half expect more scares in 2023, though. Inflation is far from beaten, and interest rates are painful. And any US correction would almost certainly have a knock-on effect.

But there’s more than £90bn in FTSE 100 dividend income forecast for 2024. And I want some of that. So if a recovery really does gather steam in 2024, what better time to buy income shares than today?

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed 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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