Volatility is a major factor impacting the market that looks to continue well into next year. To counter that volatility, investors can turn to defensive stocks to buy, no matter what the market is doing.
Here are some of those options.
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Your portfolio needs something defensive
Defensive stocks are a must in a volatile market. That’s why the first stock to buy no matter what the market is doing is Fortis (TSX:FTS).
Fortis is one of the largest utilities on the continent. The company has 10 operating regions across the U.S., Canada, and the Caribbean. Fortis also boasts 3.4 million customers across both its electric and gas segments. In fiscal 2021 the company reported $9.4 billion in revenue, nearly all of which stemmed from regulated long-term contracts.
That factor alone makes Fortis a defensive gem, but that’s not the only reason to buy. The recurring and stable revenue stream generated from those contracts allows Fortis to invest in growth initiatives and pay out a generous dividend.
Fortis has taken an aggressive stance towards growth unlike many of its peers. In recent years, that focus has shifted internally to upgrading and transitioning towards renewables.
Turning to income, Fortis dividend offers a yield of 4.23%. Fortis also provides investors with a generous annual uptick to that dividend. In fact, Fortis has adhered to that annual uptick for an incredible 49 consecutive years, with no plans to stop that cadence.
Like most of the market, Fortis stock has dropped with the market this year.
As of the time of writing, Fortis has dipped over 10% year to date. This makes it an excellent time to pick up this defensive gem at a huge discount.
Growth comes in all sizes and prices, but these prices are under $4
Along with overall volatility, inflation is very much on the minds of consumers. And when there’s inflation, consumers will cut costs by any means possible. That includes shopping at a dollar store such as Dollarama (TSX:DOL).
Dollar stores are unlike other retailers. Because of the lower-priced items they offer, they are not as immediately susceptible to the onslaught of mobile commerce as some of its larger traditional retailers are.
Additionally, dollar stores tend to do better during times of volatility and high inflation, and this is where Dollarama shines. The company has fixed prices on all its products, with several price points that max out at $4. Additionally, Dollarama bundles many products together — again, under a fixed price, which provides an additional sense of value.
The result is a high-value, low-price combination that bulk- and value-seeking shoppers find hard to ignore. That’s also part of the reason why Dollarama is one of the few companies in the black this year with an incredible 24% gain.
Despite those gains, Dollarama remains an incredible long-term buy, no matter what the market is doing.
Banking on recovery, growth, and income
Canada’s big banks are always great long-term picks, but Canadian Imperial Bank of Commerce (TSX:CM) is unique among its peers. Like all the big banks, CIBC has a certain exposure to the overheated real estate market.
With interest rates rising rapidly, that poses a risk if homeowners become over-leveraged, and CIBC has a larger share of that domestic mortgage market than its peers. That’s part of the reason why the stock has dropped over 13% year to date.
Fortunately, there’s plenty of upside for long-term investors.
First, much of that risk is already priced into the stock, and Canada’s big banks typically fare much better than their U.S.-based peers during market slowdowns. That drop in price has also swelled CIBC’s dividend to an appetizing 5.22% yield.
Finally, following a split earlier this year, the bank trades at a lower entry point for new investors. By way of example, a $5,000 initial investment translates into 78 shares. That’s not enough to retire on, but it is enough to earn a few shares through reinvestments.
Stocks to buy no matter what the market is doing
No investment is without risk, and there’s no way to time the market.
That’s why, in my opinion, the three stocks mentioned above are great long-term options to consider as part of any larger, well-diversified portfolio.
