With the TSX Index experiencing some larger ups and downs, some investors may wish to check out the defensive growers that can continue their hot run despite headwinds that could slow the economy to a halt. Indeed, a recession is never easy to invest through, but it doesn’t have to entail significant losses that stretch over time. Undoubtedly, if you’ve got solid low-beta defensive dividend stocks to help ground your portfolio, you may be able to outperform the broad TSX Index or S&P 500 on the way down. Of course, you should still prepare for some pain, as the weight of tariffs and all the sort work their way into corporate sales and earnings.
Either way, now seems like a good time to revisit some of the defensive names that can help you invest more comfortably through what could be a down year for markets. Indeed, the stock market does not go up every single year. And after two straight years of remarkable double-digit percentage gains (at least for the S&P 500), a correction is nothing all too remarkable, at least in the grander scheme of things.
As an investor, you should aim to stay put during the upswings and the downswings. At times like these, when volatility has some rushing for the exits, one stands to miss out not only on the really bad days but the really good ones as well. Remember, volatility works in both directions.
And if you get out after a steep downward move, you may kick yourself later if you sit out the equally violent upward bounce. Indeed, staying the course is the best move for most, and if you’ve got extra money to put to work, names like Waste Connections (TSX:WCN) may be worth checking out if you’re looking for a steady grower that won’t crumble in the face of economic turmoil.
Waste Connections: A great defensive growth stock to hold for 10-15 years
Waste Connections ought to be a top pick for Tax-Free Savings Account (TFSA) investors looking to continue doing well through what could be a tough next couple of quarters. Indeed, whether we’re talking about the potential for a structural downturn caused by tariffs or some other disruption that’s not yet on our radars, a recession-resilient firm with the means to grow (via mergers and acquisitions in the case of Waste Connections) through thick and thin.
At the time of this writing, shares of WCN are within 2% of all-time highs. And they’re skewing towards the expensive side at 25.1 times forward price to earnings (P/E). However, Waste Connections is one of those rare defensive growers that I wouldn’t mind paying a higher growth multiple.
At the end of the day, premium defensive exposure, predictable cash flow streams, and growth profiles demand a higher multiple, especially in today’s nail-biting environment. For the year, the company has robust (but realistic) guidance. With top-of-the-line pricing power and one of the widest moats out there, I wouldn’t be surprised if new highs are hit in short order, regardless of what happens with tariffs.
If you want stability, sometimes you’ve got to pay up. In the case of WCN shares, I view them as a worthy pick-up if you’re at all unsure about your ability to withstand a down year.
