Europe is in trouble…
Politically, ideologically, and economically.
After the Arab Spring and the rise of ISIS, immigrants swarmed the Continent.
It didn’t take long for far-right politicians to smell blood.
They went on the offensive. Nationalists and populists took over countries previously considered liberal.
They began promoting anti-EU ideologies. The uncertainty this created pushed investors to begin avoiding Europe all-together. Stock markets declined, and even constant monetary stimulus from the European Central Bank wasn’t enough to get them going.
However, now, with stocks trading near multi-year lows, I can’t help but wonder if this crisis isn’t, in fact, an opportunity in disguise.
Could this be one of the rare chances to buy healthy stocks below their intrinsic values?
I think it is.
It’s Difficult To Find Safe Cash Flow In Today’s Markets
In today’s world, investors are manically looking for cash flow.
Yields on traditional assets like U.S. government bonds and money market funds have declined so much they barely cover inflation… meaning investors are willing to purchase most any cash flow generating asset they can get their hands on.
Junk bonds, in particular, have become a favorite in recent years. Given that the economy is slowing, however, I would strongly advise you against those investments.
Instead, I recommend that you look for cash flow in depressed but otherwise healthy markets.
And the best such example right now is Europe.
During my recent analysis, I’ve discovered four European stocks with excellent dividend yields. These are blue-chip options, so you don’t have to worry about their long-term viability.
Here they are…
Daimler AG (OTC: DDAIF)
Based in Stuttgart, Germany, Daimler manufactures Mercedes-Benz and Smart cars, commercial trucks and vans, and buses.
Despite operating in a highly cyclical industry, the company got through the last two recessions without trouble and even paid out dividends in between.
Today, the auto manufacturer is paying out an impressive 6.75% dividend yield—well above its 5-year average of 4.88%.
Rich people will never stop buying Mercedes-Benz cars. I’d say this is a solid investment.
HSBC (NYSE: HSBC)
With 38 million customers, London-based HSBC is one of the largest banks in the world.
Thanks to the ongoing turmoil surrounding Brexit, the U.K.’s banking sector has declined substantially. However, with a Brexit deal nearly secured, this could be a closing window of opportunity to scoop up U.K. financial companies at a discount.
HSBC currently offers a 6.53% dividend yield. Given the consistent history of payouts, I see this as a secure source of cash flow.
BP (NYSE: BP)
Another U.K. blue chip is BP. You probably remember it because of the unfortunate 2010 Deepwater Horizon oil spill. The stock price hasn’t recovered much since, partially because of persistently low oil prices.
Nonetheless, the company remains profitable and pays out consistent dividends. Its dividend yield currently amounts to 6.61%.
BP generates ample free cash flow, which ultimately ends up in the pockets of shareholders, so there’s no reason to believe these payouts will decrease.
One Important Word Of Advice
Before you buy these names, I want to give you a final word of advice.
They all represent cyclical industries, so their stock prices could decline if we enter a recession.
Therefore, when you invest, you should apply the HODL (hold-on-for-dear-life) strategy. Meaning you should refrain from selling these stocks for at least five years, disregarding all price swings that happen in between.