Don’t Panic: This TSX Index Tumble Could Make You Rich If You Have a Game Plan!

Any time macro fears send Canadian National Railway Company (TSX:CNR)(NYSE:CNI) shares off the rails, investors should pick up shares of the gravy train that always finds a way to get back on track.

| More on:

We’re starting to hear that ‘r’ word a lot lately.

Tune into any business channel and you’re bound to hear the word “recession” being thrown around like it’s going out of style. Indeed, the next recession has been a long time coming, and like it or not, the economy and the stock market will eventually roll over. But as an investor, you should treat “expert” market forecasts with a grain of salt because you’ll quickly find that these shallow projections are a dime a dozen, and many contradict one another, only serving to further confuse you in an already perplexing time.

If you’re a new investor, it’s only natural to ask yourself: “where’s the market headed next?” or “are we near the bottom? If not, when is the bottom?”

Unfortunately, these are questions that nobody knows the answers to, as the outcome is contingent on a handful of events that not even the most seasoned economist or billionaire hedge fund manager would be able to predict with any degree of precision.

As the fears of investors begin to mount, you should take a step back and remember that you’re in the game to own pieces of wonderful businesses. When we get too caught up in the macro story, we forget this and treat all stocks as the indices themselves.

Over the long term, equities beat out any asset class when it comes to returns, and if you own the best-in-breed businesses, your portfolio, while surely battered now, will eventually bounce back. A few years down the road, you’ll ultimately be asking yourself why you didn’t treat the current dip as an opportunity to buy more shares of your favourite companies.

Consider Canadian National Railway Company (TSX:CNR)(NYSE:CNI), a dividend-growth king that has one of the widest moats of any business you could think of. Railways are notoriously difficult, if not impossible, to start from scratch, so CN Rail has essentially been a worry-free investment that’s been the ideal store for wealth.

Throughout time, investors have consistently received above-average risk-adjusted returns in the form of a continuously growing dividend and stock price appreciation. Just have a look at the chart below.

 

Over the last few decades, CN Rail has put all the S&P 500 to shame. While this is impressive on itself, investors should know that their outperformance versus the benchmark would have been even more impressive if they had consistently bought on the dips that presented themselves over time.

Foolish takeaway

Recessions, slowdowns, bear markets, it really doesn’t matter, if you buy CN Rail stock on a dip, you’ll be on the right track to financial freedom with little to no consideration for the macro fears being spread around the financial media at a given point in time.

The recent TSX tumble, I believe, is just another dip that’s unremarkable in the grander scheme of things. And if you can nab shares today, you’ll surely be thanking yourself in 10, 20, or 30 years down the road, as the outstanding rail operator continues chugging along, enriching its shareholders like it’s nobody else’s business.

Stay hungry. Stay Foolish.

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 Joey Frenette owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. CN is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

analyze data
Dividend Stocks

Here’s Why the Average TFSA for Canadians Aged 41 Isn’t Enough

The average TFSA simply isn't enough for most Canadians in their early 40s. Here's how to catch up.

Read more »

cloud computing
Dividend Stocks

Insurance Showdown: Better Buy, Great-West Life or Manulife Stock?

GWO stock and MFC stock are two of the top names in insurance, but which holds the better outlook?

Read more »

concept of real estate evaluation
Dividend Stocks

How to Earn a TFSA Paycheque Every Month and Pay No Taxes on It

Canadian REITs can turn your TFSA into a monthly paycheque machine for life. Here's how Morguard North American Residential REIT…

Read more »

A plant grows from coins.
Dividend Stocks

The Smartest Dividend-Growth Stocks to Buy With $1,000 Right Now

New dividend-growth investors should consider CN Rail (TSX:CNR) stock and another top play if they're looking to build wealth over…

Read more »

Dividend Stocks

The 3 Top Canadian Stocks to Buy With $1,000 Right Now

If you want consistent income, look to consistent dividend payers. These three stocks are some of the best in the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Want a 6% Average Yield? 3 TSX Stocks to Buy Today

These stocks pay good dividends that should continue to grow.

Read more »

chart reflected in eyeglass lenses
Dividend Stocks

Is Alimentation Couche-Tard Stock a Buy for its 0.9% Dividend Yield?

Couche-Tard stock's small yield is not enticing, but its growth potential could be a wealth creator.

Read more »

Hourglass and stock price chart
Dividend Stocks

5.2% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades!

With its 5.2% dividend yield, Toronto-Dominion Bank (TSX:TD) is a stock I'm eagerly buying.

Read more »