2 Safe Stocks to Ride Out the Market Rout

Here’s why Metro Inc. (TSX:MRU) and Fortis Inc. (TSX:FTS) are attractive picks right now.

| More on:

The stock market is beginning 2016 in an ugly way, and many investors are wondering where they can safely invest new money.

Here are the reasons why I think Metro Inc. (TSX:MRU) and Fortis Inc. (TSX:FTS) are smart choices in the current environment.

Metro

Metro operates more than 600 grocery stores and 250 pharmacies in Quebec and Ontario. The company does an excellent job of controlling costs and has proven it can compete with the wave of newcomers that has hit the market in recent years.

The grocery stores run under the Metro, Super C, and Food Basics brands. The portfolio caters to all types of shoppers, including the upscale crowd as well as those who prefer discount items. This is important when times get tough because the budget-conscious group tends to increase.

The pharmacies also do well and offer investors a good way to benefit from rising demand as the boomers move through their retirement years.

Metro’s results remain strong. The company reported a 14% rise in fiscal Q4 2015 earnings compared with the same period in 2014.

The stock’s dividend only yields about 1.2%, but the company increases the distribution regularly, and recent hikes have been significant. Shareholders have also enjoyed a 150% gain in their investment over the past five years.

People can cut out discretionary purchases when the economy falters, but they still have to eat and take their medicine. That’s why Metro is a smart choice right now.

Fortis

Fortis owns natural gas distribution and electricity generation assets in Canada, the U.S., and the Caribbean.

The appeal of Fortis lies in the fact that 96% of its revenue comes from regulated assets. This means cash flow should be reliable and predictable, which is important for investors looking for safe dividends.

Fortis spent $4 billion in 2014 to purchase Arizona-based UNS Energy. The acquisition significantly increased the amount of revenue generated south of the border, and that is having a strong impact on earnings with the U.S. dollar now worth CAD$1.40.

Management recently increased the quarterly dividend by 10% to $0.375 per share, which offers a yield of about 4%. Fortis has increased its distribution every year for more than four decades.

If you want a stock you can simply buy and forget about for years, Fortis is a solid choice.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker has no position in any stocks mentioned.

More on Investing

hand stacks coins
Dividend Stocks

Canada’s Smart Money Is Piling Into This TSX Leader

An expanding and still growing industry giant is a smart choice for Canadian investors in 2025.

Read more »

Oil industry worker works in oilfield
Energy Stocks

Energy Sector Strength: A Canadian Producer That Can Thrive in Any Market

While gold stocks are the norm, relatively few Canadian energy stocks operate primarily outside the country. The ones that do…

Read more »

how to save money
Stocks for Beginners

Canada’s Biggest Winners in 2025? My Money’s on These 2 TSX Stocks

Here’s why I’m betting on these TSX stocks to be among Canada’s biggest winners in 2025.

Read more »

ways to boost income
Investing

Where to Invest Your 2025 TFSA Money for Total Returns

These TSX stocks offer high growth and steady dividend income, making them top bets to generate solid total returns.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

TFSA Contribution Limit Stays at $7,000 for 2025: What to Buy?

This TFSA strategy can boost yield and reduce risk.

Read more »

calculate and analyze stock
Investing

3 No-Brainer TSX Stocks Under $50

These under-$50 TSX stocks have solid growth potential and can deliver significant returns over time, beating the benchmark index.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Already a TFSA Millionaire? Watch Out for These CRA Traps

TFSA millionaires are mindful of CRA traps to avoid paying unnecessary taxes and penalties.

Read more »

A plant grows from coins.
Stocks for Beginners

1 Canadian Stock Ready to Surge In 2025

First Quantum stock is one Canadian stock investors should seriously consider going into 2025, and hold on for life!

Read more »