After a bright start to July, investor nervousness has begun to creep back in again. The FTSE 100 moved to fresh multi-week lows around 6,150 points on Friday as coronavirus-related news worsened again. For the moment stock investors are mothballing their strategies to try and get rich and retire early in favour of simply hoarding their cash.
This is a recipe for disaster. Firstly, locking your money up in low-paying products like Cash ISAs offers you paltry returns on your hard-saved money. And secondly, it means that investors aren’t capitalising on some of the brilliant dip buying opportunities out there.
Get rich by buying low!
Timing your buys and sells correctly is a key part of maximising your investment returns and getting rich. That means purchasing shares at rock-bottom prices instead of sitting nervously on the sidelines.
Sure, the near-term outlook for the global economy is quite scary. But over the long run it shouldn’t make a huge dent in the profits of those investors who have built a diversified portfolio of high-quality stocks. Just ask Warren Buffett who famously urged investors to “be fearful when others are greedy, and greedy when others are fearful.”
I’d buy dividend stocks
Dividend cuts have been coming thick and fast following the Covid-19 outbreak as companies have scrambled to save cash. There could well be many more to come during what looks likely to be a painful economic downturn.
That does not mean, though, that income investors need to panic. There remain scores of brilliant dividend stocks that should continue to pay big dividends in 2020 and beyond. Vodafone Group (LSE: VOD) is one business that should still help stock pickers get rich and retire early by paying big dividends.
More FTSE 100 heroes
Shares in the FTSE 100 firm have fallen almost a fifth in value since the market crash began in late February. As a consequence Vodafone boasts a 6.3% forward dividend yield that makes it too good to miss.
Mobile phones are more than just a luxury nowadays and so the telecoms ace can expect revenues to keep rolling in despite the global recession. And this should keep its long-running ultra-generous dividend policy in business. But don’t just buy Vodafone on account of its near-term defensive qualities. Rocketing data demand in emerging markets, regions in which the FTSE 100 company has invested heavily in recent decades, should pave the way for explosive earnings – and by extension dividend – growth in the years ahead.
Vodafone is one of the best UK shares for those seeking gigantic dividends for many years to come. But it’s not the only rock-solid FTSE 100 income stock I’d buy today. Healthcare giant GlaxoSmithKline, electricity provider SSE, and defence contractor BAE Systems also have the sort of defensive operations that enable profits to keep rising whatever the weather. And these businesses offer yields ranging from 4.5% to 6% following recent share price falls.
Stock market volatility is nothing new, and long-term investors shouldn’t be scared to invest. In fact, I believe now is a great time to build a portfolio of cheap, top-quality shares to get rich from.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.