Even seasoned investors could not read the recent market movements. TSX stocks at large fell 40% in early March on the back of rising tensions of the pandemic. However, many of those stocks have recovered and have even broken above their pre-pandemic highs.
The volatility in stocks this year has been enormously high, and it is all the more difficult to sustain for beginners. More importantly, global equity markets are expected to turn even more volatile, given the U.S. presidential elections in November and uncertain economic recovery post-pandemic.
New investors can focus on less-volatile, dividend-paying TSX stocks that generally outperform during market downturns. Consistent dividends will create a passive-income stream, while the slow stock movements will provide stability.
Hydro One
Hydro One (TSX:H) is one of the biggest utilities in the country and primarily operates in Ontario. It is not involved in power generation and only operates as a transmission and a distribution company. This shuns a huge upfront capital investment and makes it a safe bet for investors.
Utilities generally generate stable earnings and thus pay stable dividends. Hydro One currently yields nearly 4%, marginally higher than TSX stocks at large. That simply means an investment of $10,000 in Hydro One would generate $400 in dividends every year. Notably, the company management aims to increase its dividends by 5% per year for the foreseeable future.
Hydro One stock has surged more than 10% so far this year, notably beating the TSX Index and its peers. Amid the increasing broader market volatility, investors should increasingly switch to utility stocks like Hydro One in search of higher yields.
Hydro One’s solid dividend profile, attractive valuation, and earnings stability make it an attractive bet for long-term investors.
Enbridge
The energy midstream titan Enbridge (TSX:ENB)(NYSE:ENB) is another safe bet for long-term investors. It has minimal exposure to volatile crude oil prices, which makes its earnings relatively stable.
Its unique network of pipelines is a substantial competitive advantage. Enbridge transports 25% of the oil and 20% of North America’s total natural gas needs.
Enbridge stock offers a dividend yield of almost 8% at the moment. Notably, it has managed to grow dividends by 10% compounded annually in the last 25 years.
Enbridge stock did not quite recover post-COVID-19 crash. This should be a worthwhile opportunity for long-term investors, given the discounted valuation.
Royal Bank of Canada
Royal Bank of Canada (TSX:RY)(NYSE:RY) is the largest among the Big Five banks when it comes to market capitalization. Investors who are looking for stability can certainly consider Royal Bank stock amid these volatile markets.
Along with retail banking, RBC has a large presence in insurance, wealth management, and treasury services. Its geographical and operational diversification bodes well for its earnings stability. Also, Royal Bank’s leadership position, along with size and scale, make it stand tall among peers.
Royal Bank stock currently yields 4.5%, higher than that of broader markets’ average. With its handsome dividends and steady earnings growth, the stock returned almost 180% in the last 10 years, notably beating peer bank stocks.
Importantly, the ongoing pandemic-driven challenges might weigh on Canadian banks, including Royal Bank. However, Royal Bank stock remains a solid bet for long-term investors due to its attractive valuation and handsome dividends.
