This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.
It’s been about a year since the market started to drop into freefall. The TSX is down by about 7 per cent as of early April, and yet that’s nowhere near recession territory. If investors look to the past, they’ll see that recessions are usually marked with market drops around 40 per cent. So while right now might seem like the market is improving, unless you have a crystal ball, it is hard to say what the rest of 2023 will look like.
That’s why preparation is so important. There are certainly ways to prepare and set your portfolio up for surviving market volatility. In fact, there are low-volatility stocks that can help keep your portfolio afloat even during times when the TSX dips into double digits.
Granted, we’re unlikely to repeat anything so dire as the Great Recession anytime soon. Yet a “mild recession”, as anticipated this summer, could still hurt. So let’s look at three TSX stocks on the market today that offer both stability and passive income through dividends, to help you through any market volatility. If you make a move, make sure to use a trading platform with low fees.
Don’t miss
- Vinovest review 2023: A unique, yet easy platform for Canadians to invest in wine
- A guide to the best Canadian ETFs for 2023
- Want to invest outside of the stock market? Try fine art
Brookfield Infrastructure Partners LP (BIP)
Infrastructure has long been a steady option for investors seeking stability. Infrastructure makes up the essentials of our daily lives, from the water we drink to the power in our homes. That’s why no matter what the market does, infrastructure will remain stable.
While there are many options out there, Brookfield Infrastructure Partners LP is one to consider. The infrastructure stock has a long history of share growth, and has shown in its 14-year history that it can handle downturns and come out strong on the other side.
Much of this is thanks to the way the $20.8-billion company is set up. It currently focuses mainly on energy production and mines for its assets. These are classified as “long-term” assets, providing long-term contracts. Furthermore, these assets purchased by the company have low maintenance capital costs, with high barriers to entry. Combined, this creates stable income and cash flow for investors.
Since coming on the market, shares have risen 611 per cent as of April 2023. Investors today will notice shares are down 20 percent in the last year, but there’s improvement since the beginning of 2023. So it might be an opportune time to jump in and get a 4.29 percent dividend yield while you’re at it.
Hydro One (H)
While Hydro One hasn’t been on the market long, the $23.3-billion utility company provides most of the power to Ontario, Canada’s most highly-populated province.
While transmission accounts for 60 per cent of the company’s value, distribution takes up the other 40 per cent. The company is well supported with the province of Ontario holding about 47 per cent of its common equity stake.
Utility stocks have long been solid options to help investors through tough times, and much for the same reasons as infrastructure stocks. They provide power, which is needed no matter what happens in the market. The difference with Hydro One is that it’s relatively new, so there’s potential for a long-term position in your portfolio.
In the meantime, shares of Hydro One stock are up 82 per cent since coming on the market in 2015, and 14 per cent in the last year. In fact, it’s done quite well even during this downturn, providing some immediate protection for investors. Plus, there’s a dividend yield currently at 2.91 per cent.
Royal Bank of Canada (RY)
Now if you’ve been doing pretty much any reading about investing during a downturn, you’ll likely have seen that the banks tend to not do so great. In fact, look to the very recent past and you’ll have seen the Silicon Valley Bank collapse, among others. While that may occur in America, the Canadian banking system is incredibly regulated and stable.
Royal Bank is a great example of this stability. It continues to be the largest bank in Canada in terms of assets, with a $180-billion market capitalization. The company continues to have lucrative operations thanks to its success in wealth and commercial management, insurance and capital markets services.
Even when Canadian banks see downturns, they have provisions for loan losses. This has allowed the banks to come roaring back within a year of recession lows, and Royal Bank is no exception.
In fact, it is doing well compared to the other Big Five Banks so far in 2023. Shares are down just 5 per cent in the last year and up 113 per cent in the last decade. The 4.03 per cent dividend yield is attractive as well.
Those looking to take control of their investments should certainly explore online trading platforms. The best sites offer resources and tools to help investors make informed decisions as they build and manage their investment portfolios.
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Post a Comment