Worried About a Recession? 2 Canadian Blue-Chip Stocks to Buy and Hold for Dear Life

A recession is worrisome. Buying two blue-chip TSX stocks and holding them for the long term will deliver stable, less risky returns.

| More on:
worry concern

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Bank of Canada has not officially announced a recession, although many economists predict it will come soon in North America and globally. While Governor Tiff Macklem said the rate hikes would stop now, the pause is conditional. The policymakers will assess whether eight rate hikes will bring inflation closer to its target range. 

Before year-end 2022, a Leger survey showed that 81% of Canadians were already worried about the possibility of a recession. Some investors will likely stay away from the market and return when it’s stable. However, the rational approach under the present conditions is to buy blue-chip stocks and hold them for dear life.

Solid as a rock

The Royal Bank of Canada (TSX:RY) is a no-brainer buy during a recession. Apart from being the largest Canadian bank, it’s also the largest TSX company by market capitalization. The $191 billion banking giant is financially resilient and can survive turbulent economic conditions as it has done in the past.

This Big Bank stock currently trades at $138.12 per share (+9.57% year-to-date) and pays a decent 3.82% yield. Dividends should be sustainable and rock-steady, given the 44.85% payout ratio. RBC’s 152-year dividend track record should give investors confidence to buy the Big Bank stock and never sell.

Good defensive position

A dividend aristocrat like ATCO Ltd. (TSX:ACO.X) is an ideal backup to the top Canadian bank. You’re fortifying your portfolio with a defensive asset. More importantly, the dividend payout should be rock-solid and secure for decades. The current share price is $42.25, while the dividend yield is 4.49%.

Created with Highcharts 11.4.3Atco PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Growth opportunities through several projects are opening for this $4.8 billion company. The U.S. Division of ATCO Frontec secured a new three-year base contract (extendable to two years) from Northern Star Resources’ Pogo mine in Fairbanks, Alaska.

ATCO Electric Yukon signed a landmark electricity purchase agreement with Copper Niisüü Limited Partnership in December 2022. The former will provide technical expertise for the project, while the latter will build the Beaver Creek solar facility.

In early January 2023, ATCO’s Structures division acquired Triple M Modular Housing, a leading manufacturer of factory-built modular housing in North America. The acquisition gives the division a strategic advantage in the current housing market, as Triple M can deliver affordable, high-quality homes within a short construction timeline.

Canadian Utilities, another ATCO company, acquired the wind and solar assets and projects of Suncor Energy last month. It also entered a new 15-year renewable energy purchase agreement (REPA) with Microsoft Corporation. The latter will purchase 150 megawatts (MW) of renewable energy from ATCO’s Forty Mile Wind Phase 1 Project in Alberta.

ATCO is a reliable passive income provider owing to its long history of paying dividends and consistently raising them. The utility stock’s dividend growth streak is 28 consecutive years and counting.

Ideal combo

The combination of RBC and ATCO in a stock portfolio can wash away recession fears. With this pair of blue-chip stocks, you can maintain a conservative risk profile and still meet your long-term financial goals.

Should you invest $1,000 in Cardano Aud right now?

Before you buy stock in Cardano Aud, 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 Cardano Aud 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 $18,750.10!*

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 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/22/25

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

The Best Canadian Stocks to Buy Right Now With $3,000

Just because you don't have tens of thousands in the bank doesn't mean your investments can't get there.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

2 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for A Decade

These dividend stocks have resilient payouts and offer ultra-high yields, making them top investments to generate solid passive income.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

1 “Growthy” Dividend ETF to Buy to Generate Passive Income

This Canadian dividend ETF offers a decent monthly yield in addition to good share price appreciation potential.

Read more »

a person looks out a window into a cityscape
Dividend Stocks

This 7.6% Dividend Stock Pays Cash Every Single Month

This monthly paying dividend stock is a top choice for investors looking for long-term passive income.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

Retirees: 2 Dirt-Cheap Dividend Stocks to Buy in January

Rogers Communications (TSX:RCI.B) and another dirt-cheap stock may be buys for the next five years and beyond.

Read more »

Lights glow in a cityscape at night.
Dividend Stocks

5 Canadian Dividend Stocks Everyone Should Own

These Canadian stocks have a solid track record of dividend growth and offer compelling yields near their current market price.

Read more »

dividends can compound over time
Dividend Stocks

Want Decades of Passive Income? 4 Stocks to Buy Now and Hold Forever

These four stocks are some of the highest-quality investments you can buy now, offering investors a mix of high yields…

Read more »

sale discount best price
Dividend Stocks

2 Bargain TSX Stocks to Buy While They Are Still Cheap

These stocks look cheap and pay attractive dividends.

Read more »