3 Defensive Stocks to Protect Against a Market Crash

Volatility is back, and it is time to protect your portfolio by investing in stocks such as Kirkland Lake Gold Ltd (TSX:KL)(NYSE:KL).

| More on:

Here we go again. It seems every few months, trade threats take centre stage, and the markets suffer mini-corrections. We live in a time of considerable uncertainty, and volatility continues to rule the day.

For investors who can’t stomach volatility, the threat of a market crash is a stressful proposition. For such investors, it would be wise to invest in stocks that have a low beta, and that are defensive in nature. That is to say, they tend to outperform when the markets correct.

With that in mind, here are three high-quality, defensive stocks to protect your portfolio against a market crash.

Kirkland Lake Gold 

Every investor should have exposure to gold, which has long been a safe-haven for significant volatility. It also just happens to be the perfect storm for the precious metal. Recently, it has broken through key resistance, and gold miners have started to catch a bid. The good news is that this all started before the recent volatility, and recent events will only accelerate a sector shift.

One of the best positioned to take advantage is Kirkland Lake Gold (TSX:KL)(NYSE:KL). Kirkland Lake has been the best-performing stock in the industry and doesn’t have any of the negative associations from the previous industry crash. It has proven it can deliver and is expected to grow production by 30% annually over the next few years.

Fortis

Utilities are synonymous with the defensive investor. Why does a market correct? Typically, it is the result of uncertain economic activity and the threats of a recession. In such times, interest rates are cut and capital-intensive industries benefit. Are we in the midst of a recession? Not quite, but last week’s interest rate cut by the Feds south of the border is certainly a warning sign.

Take solace in Fortis (TSX:FTS)(NYSE:FTS), one of North America’s premier utility companies. Fortis has the second-longest dividend-growth streak in Canada at 45 years. In anticipation of the recent rate cut, Fortis has returned 15.1% in 2019. Expect this outperformance to continue in times of uncertainty.

Park Lawn

As the saying goes, there are only two certainties in life: death and taxes. Park Lawn (TSX:PLC) is well positioned to take advantage of the former. As the only Canadian publicly listed firm in the funeral business, Park Lawn has been a star.

Amid the market fear, Park Lawn will continue to quietly go about its business. The industry is highly fragmented and ripe for consolidation. Park Lawn has taken full advantage of this and is proving to be an adept serial acquirer. A dip in interest rates will be a boon for the company, as it will result in lower borrowing costs.

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 Mat Litalien owns shares of FORTIS INC.

More on Dividend Stocks

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »