The 4 Best Low-Risk Investments for Canadians

Are you looking for safety? You don’t have to get out of the stock market. Instead, consider these safe, low-risk stocks for your portfolio.

Amy Legate-Wolfe ❯

@amylegatewolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest.

Published May 17, 2024 4:30 pm EDT

| More on: KOEXEFTST

Today, we’re not looking for risk. We aren’t looking for high growth that could lead to high losses. We want stability, and we want it now. This is why I’m going to go over the four best low-risk investments Canadians should consider.

To do that, we’re going to look at four sectors and the stocks that offer the best long-term hold. So, let’s get into it.

Utilities

Utility companies typically provide essential services like electricity, water, and gas, making them relatively stable investments. They tend to have consistent cash flows and pay dividends regularly, making them attractive for risk-averse investors.

One example of this is Fortis (TSX:FTS). Fortis stock operates as a regulated utility company primarily involved in the generation, transmission, and distribution of electricity and natural gas. Regulated utilities typically have stable revenue streams because they operate in regions where government regulators set rates, ensuring a reasonable return on investment. This regulatory framework provides predictability and reduces the company’s exposure to market fluctuations.

Furthermore, Fortis stock has a long history of paying dividends and increasing them consistently over time. The company’s reliable cash flows and financial stability support its ability to pay dividends, making it an attractive investment for income-oriented investors seeking steady income streams.

Consumer staples

Next, companies that produce everyday consumer goods like food, beverages, and household products are considered defensive investments. Demand for these products tends to remain stable even during economic downturns, making the sector less susceptible to market volatility.

One proven stock in this sector is Coca-Cola (NYSE:KO). Coca-Cola is a global beverage company known for its iconic soft drink brands, including Coca-Cola, Diet Coke, and Sprite. Beverages are a staple in many consumers’ diets worldwide, providing Coca-Cola with a stable revenue base. Additionally, the company has been expanding its portfolio to include healthier beverage options to adapt to changing.

And, despite facing challenges such as changing consumer preferences and health concerns related to sugary beverages, Coca-Cola has demonstrated resilience and maintained stable financial performance over the years. The company generates significant revenues and profits, supported by its strong brand, diversified product portfolio, and global presence.

Healthcare

Another strong industry is healthcare. It’s a defensive sector that tends to perform well regardless of economic conditions. Companies involved in pharmaceuticals, medical devices, and healthcare services often generate steady revenues supported by demographic trends and ongoing healthcare needs.

Of these, Extendicare (TSX:EXE) is a strong company to consider. The company operates long-term-care homes, retirement communities, and home healthcare services across Canada. Similar to Sienna Senior Living, Extendicare stock benefits from the increasing demand for senior care services driven by demographic trends.

As the population ages, the demand for senior care services is expected to increase steadily. And, Extendicare often benefits from long-term contracts with government agencies or private payers for the provision of senior care services. These contracts typically provide a predictable stream of revenue, enhancing the company’s financial stability.

Telecommunications

Granted, telecommunications has been having problems. But overall, telecommunication companies provide essential services such as internet, phone, and television, making them relatively resilient during market fluctuations. These companies often have predictable revenue streams and strong cash flows, which can translate into consistent dividends for investors.

Despite these issues, Telus (TSX:T) continues to be a strong and growing option. Telus is one of the largest telecommunications companies in Canada, with a significant market share in wireless, internet, and television services. Its strong brand presence, extensive network infrastructure, and large customer base contribute to its competitive advantage and stability. It also benefits from recurring revenue streams from subscription-based services, such as wireless plans, internet subscriptions, and television packages. Plus, it has a track record of stable dividend payments.