1 Consumer Staple Stock to Protect Your Portfolio From a Recession

Having a portfolio that is robust and can weather market storms is one of the major keys to long-term investing success. So, consider adding this top defensive stock to strengthen your portfolio.

| More on:

Markets have been booming the last few years both north and south of the border. Even as current Coronavirus fears weigh down markets one day, the next day they come storming back, continuously reaching new all-time highs.

While this is great for investors’ portfolios in the short term, the prudent move would be to look ahead and prepare for what’s coming next.

Experts have called for a recession soon, stating the likelihood of economic turmoil seems to be getting stronger by the month for a variety of reasons.

Although the economy has been strong, it’s slowly reaching its capacity, and as debt loads start to weigh on consumer spending and the velocity of money starts to slow, things could take a turn for the worse rather quickly.

Investors should be prepared for this impending recession and corresponding market crash, and while that doesn’t mean you should go out and sell all your stocks, increasing your weighting of defensive industries like consumer staples is a great way to improve the resiliency of your portfolio.

Defensive stocks are more recession proof because of the nature of their businesses. Consumer staples, for example, sell items that consumers need, such as food and pharmaceuticals, as opposed to discretionary items, such as entertainment or luxury goods.

Because of this, the impact to consumer staple businesses when consumers have less spending money in their pockets is much less pronounced than a lot of other industries, making companies in that industry ideal stocks to hold in your portfolio, especially as the economy reaches its peak.

In addition, because investors know about the strength of defensive stocks, they are less likely to sell these companies in a market crash, because there won’t be as much fear surrounding the companies’ operations, allowing the stocks to hold up better and protect investors wealth when the market is melting down.

One of the top consumer staples on the TSX to buy today is North West Company (TSX:NWC).

North West owns a number of stores in remote communities that are responsible for providing the residents of those communities with all their living needs. It operates in northern Canada, western Canada, Alaska, and the Caribbean.

Not only is it a great company because it sells products consumers need, but because it serves remote areas, entire communities rely on it, considerably strengthening the economics of its business.

North West also owns a small airline to help integrate its business, which strengthens its operations even more by cutting costs and creating strong synergies to help boost sales.

It’s a strong company growing with discipline over the long term, making it a great stock for investors to buy as part of the core of their portfolio, increasing the size of the position only when the stock is trading at an attractive price, like it is now.

At current prices, North West is trading at the bottom of its 52-week range at a price-to-earnings ratio of just 16.7 times.

At these ultra-low trading prices, North West’s dividend is yielding 4.9% — an attractive payout, especially if the economy does slip into a recession soon.

Analysts seem to like North West’s prospects, too, as the consensus target price is $31, nearly 15% upside, and with its 4.9% dividend, investors have potential to see almost 20% in the near term, while strengthening their portfolios in case of a recession.

Finding companies with resilient businesses like North West and trading at attractive prices is not easy to find these days, so take advantage of this opportunistic share price from North West and add this top company to both grow and protect your wealth, no matter what the economy does.

Should you invest $1,000 in The North West Company right now?

Before you buy stock in The North West Company, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and The North West Company wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 Daniel Da Costa owns shares of THE NORTH WEST COMPANY INC.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How I’d Invest $7,000 in My TFSA for $660 in Tax-Free Annual Income

Canadians looking for ways to make the most of the new TFSA contribution room should consider investing in these two…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

This Dividend King Paying 7.5% in Monthly Income Is a Must-Have

This high-yield TSX stock might not be a textbook Dividend King, but its reliable monthly payouts and improving financials make…

Read more »

path road success business
Dividend Stocks

How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates

Few Canadian stocks are as easy a choice as this one, making it perfect during volatile periods.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Generate $200 in Monthly Income With a $7,000 Investment

Want to establish $200 in monthly income (or even more?) Here's an easy way to start today that will provide…

Read more »

Printing canadian dollar bills on a print machine
Dividend Stocks

Got $25,000? Turn it Into $250,000 in a TFSA as the Canadian Dollar Rises

Investing doesn't have to be risky or difficult, especially with this top stock.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Where Will Loblaw Be in 3 Years?

Loblaw (TSX:L) stock could be a stellar performer as tariffs and headwinds move in on Canada's economy.

Read more »

customer uses bank ATM
Dividend Stocks

Where Will National Bank Be in 5 Years?

National Bank of Canada (TSX:NA) stock still looks like a great deal at these levels.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

The Smartest Industrial Stock to Buy With $3,000 Right Now

Aecon is a value stock that's benefiting from strong infrastructure spending today and in the years to come.

Read more »