Stock Up Sale
The vaccine breakthrough came in December 2020, yet provinces in Canada are bracing to return to hard lockdowns. COVID-19 cases are rising again. Prime Minister Justin Trudeau urges vigilance over the holidays, despite the start of a complex vaccination project.
In the stock market, income investors still worry about a market crash. COVID-19’s second wave could unsettle the landscape and trigger another selloff. If you’re saving for the long term, seek the safety of Dividend Aristocrats. Fortis (TSX:FTS)(NYSE:FTS) and North West Company (TSX:NWC) could set you up for life.
Rare find
Utility stock Fortis is probably in the investment portfolio of nearly all risk-averse investors. The company doesn’t pay the highest dividend, but it indeed offers capital protection and dividend safety. You’re buying peace of mind more than anything else.
The business model is low-risk and recession resistant, because 97% of the company’s utility assets are regulated. Fortis has been operating since 1885 and engages in electric transmission, energy distribution, and regulated power generation. Its market cap stands at $24.38 billion today.
Fortis is a perennial top-of-mind choice of income investors. The defensive asset has increased its dividends for 46 straight years. Management plans to grow dividends by 6% annually through 2024. The goal is achievable, given the secure cash flow and insulation from economic fluctuations. If you invest now, the dividend yield is 3.88%. Your income stream should be lasting for years on end. Fortis is a rare find.
Niche play
The North West Company is a consumer-defensive stock and is as reliable as Fortis when it comes to dividend payouts. It has a market cap of $1.64 billion with supermarket format stores, wholesaling, and retailing as its core businesses. Allied operations are shipping and air cargo.
One compelling reason to invest in North West is that it operates in a near monopoly. The company caters to the needs of underserved rural communities and neighborhoods. Its services start in northern Canada and western Canada and go as far as rural Alaska, the Caribbean, and the South Pacific islands.
North West’s history dates back to 1668 — 352 years ago. Because its outbound supply chain is well established, it has no difficulty reaching remote stores or pursuing expansion opportunities. Over the last 10 years, the compounded CAGR per year is 6%.
The current share price is $33.66, which represents a 28% year to date. If you initiate a position today, North West pays a fantastic 4.29% dividend. Furthermore, the business model is proven and recession-proof. Assuming you invest your life savings of $280,000, the lifetime monthly income is $1,001.
Same pedigree
If there’s elevated market volatility, the best counter is to move to safer ground. Fortis and North West Company are not only Dividend Aristocrats but must-own assets for the long haul. The companies come from different sectors but possess the same defensive qualities and lasting income potentials.
Fortis’s deep moat stems from its extensive infrastructure that delivers cost-effective energy to homes and businesses throughout North America. North West rules the retail industry in hard-to-reach locations and geographically challenged communities. Having both in your portfolio should calm your fears and protect your capital against market disruptions.
