Could a market crash provide a once-in-a-decade opportunity to buy FTSE 100 dividend gems?

International markets opened on shaky floor this week following renewed tensions within the Center East. Whereas US markets have been hit hardest, the FTSE 100 hasn’t escaped unscathed.

Crude oil jumped 2.78% to $93 a barrel because the Iran battle prompted fears of additional provide disruptions within the Strait of Hormuz.

Could this be the start of one other market downturn?

The AI bubble

The continuing geopolitical instability means traders are extra cautious than ever about dangerous AI-driven tech hype. On Monday (8 June), the tech-heavy Korean KOSPI index slumped 9% inside minutes of opening.

Nasdaq 100 tech giants Apple, Nvidia and Microsoft depend on Korean suppliers Samsung and SK Hynix for reminiscence chips. However the US will not be alone within the struggling.

UK-listed shares like Diploma, Smiths Group and Rolls-Royce additionally depend on Korean suppliers. In the meantime, miners comparable to Rio Tinto and Glencore could possibly be not directly impacted by a wider decline in Asian markets.

What does this imply for UK traders?

A market downturn may provide a once-in-a-decade opportunity to buy fine quality firms at discount costs.

Naturally, shares uncovered to AI and provide chain disruption stay dangerous. However the knock-on impact to the general market makes every thing cheaper — even secure, dependable shares.

Take Authorized & Common (LSE: LGEN), for instance. The main insurer presently affords the best dividend yield on the FTSE 100. However whereas the general index is up 70%, L&G is buying and selling at a worth solely barely larger than in 2016.

Logic dictates that when the market bounces again, the shares may make a large restoration as traders pile again in. However why have they struggled to make positive factors over the previous decade?

Threat components to think about

Currently, earnings have been uneven because the UK financial system faces uncertainty amid geopolitical threat. The outcome has impacted the insurance coverage sector excessively, main to a valuation low cost.

It nonetheless faces dangers from tariff-related volatility and the Center East battle, which can drag on longer than anticipated.

Nonetheless, its newest outcomes have been spectacular. Core working revenue grew 6% year-on-year to £1.62bn, whereas pre-tax revenue elevated 143% to £807m. It famous notably sturdy efficiency in Institutional Retirement and benefited from asset gross sales.

And with a Solvency II ratio of 217%, it has a vital cushion for dividends even in downturns. The group’s current £1.2bn share buyback — the biggest in its historical past — additional cements its dedication to shareholder returns.

The underside line

A inventory market crash is wanting more and more probably, confronted with a double-whammy from provide chain shocks and a attainable AI bubble. However traders shouldn’t panic. Now’s the perfect time to search for uncommon undervalued alternatives, and I believe Authorized & Common is one price contemplating.

After the market inevitably recovers, the shares could by no means commerce at such a low worth once more.

They usually’re not alone — a few others I’ve been wanting into embrace M&G, Imperial Manufacturers and Diageo. All three have excessive yields and strong dividend observe data, but face short-term worth depreciation regardless of sturdy outcomes.

In order the drama unfolds, think about trimming these riskier tech positions and shifting funds into firms with strong revenue potential and a extra defensive moat.

Then sit again and anticipate the storm to cross.

Do you have to make investments £5,000 in Authorized & Common Group Plc proper now?

When investing skilled Mark Rogers and his crew have a inventory tip, it could pay to pay attention. In spite of everything, the flagship Twelfth Magpie Share Advisor publication he has run for almost a decade has offered 1000’s of paying members with high inventory suggestions from the UK and US markets.

And proper now, Mark thinks there are 6 standout shares that traders ought to think about shopping for. Need to see if Authorized & Common Group Plc made the record?

Mark Hartley owns shares in Authorized & Common, Diageo and Diploma.