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Time to sell this sinking FTSE 100 dividend stock?


first_imgSimply click below to discover how you can take advantage of this. See all posts by Paul Summers Time to sell this sinking FTSE 100 dividend stock? In addition to the loss of human life (which is undoubtedly the most important and tragic consequence of the outbreak), the coronavirus has also caused strife for many London-listed companies with a global presence. An example is cruise line operator Carnival (LSE: CCL) — a stock I began buying last year.Seen purely from an investment perspective, should I and other holders jump ship? I’m inclined to say no.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Negative publicityAdmittedly, the last month or so hasn’t been great for the FTSE 100 behemoth. Aside from being caught up in the general sell-off of travel-related stocks, Carnival has had to contend with an outbreak of the virus on one of its ships — the Diamond Princess — which remains moored in Japan.To make matters worse, it’s emerged that a passenger on another of the company’s ships, the Westerdam, tested positive after it docked in Cambodia and people were permitted to disembark, raising concerns that the virus will now spread throughout Asia. This has led to lots of sensationalist headlines describing cruise ships as “floating Petri dishes“.A hit to profits is odds-on. Indeed, Carnival already declared on February 12 that its decision to suspend operations in Asia to the end of April would impact earnings by between $0.55 and $0.65 per share. Of course, the actual figure could turn out to be even worse if this is extended. So, why do I think investors should keep calm and carry on?Long-term horizonFirst, things like the coronavirus are ‘known unknowns’ (we accept there’s a possibility they will happen, we just don’t know when or how much damage they will do). This, combined with the fact that Carnival’s shares were hardly expensive before news of the coronavirus broke, may lead the market to be more forgiving of poor numbers when they are announced. Having lost almost 20% in value since mid-January, there’s a chance that the worst might already be over. Second, while emerging economies are likely to be a source of growth for Carnival going forward, they currently account for only a very small proportion of its passengers. Again, purely as an investor, I’d be more concerned if the outbreak originated in the US — its largest market.  Third, although Carnival’s status as the industry leader makes it an easy target during tough times, it arguably also makes it the best horse to back when positive sentiment returns. History suggests operators tend to bounce back strongly in the year following virus outbreaks. Just as rare air disasters haven’t stopped people flying, nor will health crises on ships stop people from cruising.   Finally, there’s the argument that the dividends on offer compensate for any ongoing underperformance of the stock. A predicted 203 cents per share (157p) cash return in 2020 leaves the company yielding 5.2% right now. Granted, there can be no guarantees and things could conceivably go from bad to worse if the virus isn’t contained. Being a holder of the stock also makes it more likely that my view of Carnival is clouded by bias.At times like these, however, I think it’s best to recall the Fool UK’s philosophy of investing in companies with great long-term potential. Things could stay choppy for a while, but focusing on the horizon (and less on the short-term behaviour of Carnival’s share price) should make things easier. Image source: Getty Images. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Paul Summers owns shares of Carnival. The Motley Fool UK has recommended Carnival. 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.center_img “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Paul Summers | Monday, 24th February, 2020 | More on: CCL I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.last_img

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