Two TSX stocks to smooth out the market fluctuations



Many people who began investing during the low-interest rate bull market of 2020–2021 probably had a portfolio that looked like this: a few large-cap U.S. and Canadian tech/growth stocks, maybe a little cryptocurrency, and possibly some meme stocks, too.

Well, this didn’t work out so well in 2022. As interest rates rose to combat less-than-transitory inflation worldwide, valuations suddenly became important again. Investors realized that paying inflated prices for speculative companies with poor fundamentals in competitive industries might not be a good idea.

So, if you’re looking to dial back your stock portfolio’s volatility and reduce its sensitivity to the market’s movements, I suggest considering low-beta, dividend-paying stocks from the consumer defensive sector, which benefits from evergreen demand. Here are my top two picks today.

Loblaw

My first pick is grocery giant Loblaw Companies Ltd. (TSX:L). This stock held up quite well in 2022, ending the year up 17% with dividends reinvested while the rest of the market melted down. It may not have the highest dividend at a forward yield of 1%, but there’s more than this to consider.

Namely, investors should take a second look at Loblaw for its low five-year monthly beta of just 0.06. This is a measure of the stock’s sensitivity and volatility relative to the broad market, which always has a beta of 1.00. As you can see, Loblaw tends to have more muted movements, up or down.

While Loblaw has suffered big drawdowns like in 2007 when the entire market crashed, historically, it has been less erratic. From 1996 to present, the company only recorded 8 years of annual negative returns out of 28 total. Not bad for a “boring” old grocery store!

Metro

As great as Loblaw is, its future performance isn’t guaranteed. Management may run the company poorly, or it may face a scandal. Nobody knows what will happen 10 years from now, so it’s good to diversify to other stocks. I suggest its consumer defensive peer, Metro Inc. (TSX:MRU).

Like Loblaw, Metro also operates supermarkets, discount stores, and drug stores. However, Metro has also expanded to the manufacture of generic drugs and online grocery shopping. Like Loblaw, Metro has a low beta of 0.02, making it perfect as a low-volatility core holding.

Metro doesn’t have the highest dividend either, with a current forward yield of 1.72%. That being said, if you’re looking for safety over income, then Metro could work. To take these two picks to the next level, consider adding more TSX dividend stocks (and the Fool has some great picks below!)

The post 2 TSX Stocks to Smooth Over the Market Bumps appeared first on The Motley Fool Canada.

Free Dividend Stock Pick: 7.9% Yield and Monthly Payments

Canada’s inflation rate has skyrocketed to 6.9%, meaning you’re effectively losing money by investing in a GIC, or worse, leaving your money in a so-called “high interest” savings account.

That’s why we’re alerting investors to a high-yield Canadian dividend stock that looks ridiculously cheap right now. Not only does it yield a whopping 7.9%, but it pays monthly!

Here’s the best part: We’re giving this dividend pick away for FREE today.

Claim your free dividend stock pick * Percentages as of 11/29/22

(function() { function setButtonColorDefaults(param, property, defaultValue) { if( !param || !param.includes('#')) { var button = document.getElementsByClassName("pitch-snippet")[0].getElementsByClassName("pitch-button")[0]; button.style[property] = defaultValue; } }

setButtonColorDefaults("#5FA85D", 'background', '#5FA85D'); setButtonColorDefaults("#43A24A", 'border-color', '#43A24A'); setButtonColorDefaults("#fff", 'color', '#fff');>

More reading

The Best Canadian Food Stocks in March 2023 Stressed? Get Stability and Income With Loblaw Stock 3 Dividend Stocks to Buy Now if You Want to Retire in 20 Years3 Cheap TSX Stocks to Buy for Passive Income 3 TSX Stocks You Can Keep Forever

Fool contributor Tony Dong 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.

https://www.fool.ca/2023/03/08/2-tsx-stocks-to-smooth-over-the-market-bumps/

Comments

Post a Comment

Popular posts from this blog

Get Rich With These High-Yield Canadian Dividend Stocks

Image
Dividend stocks are one of the smartest ways to create wealth in the long term. By investing in dividend-paying stocks, one can generate returns in two ways: dividends and capital appreciation. As top dividend-paying companies generally have well-established businesses and a growing earnings base, they generate steady capital gains in the long term. Further, the reinvestment of dividends allows investors to accumulate more shares and create wealth in the long term.  With this background, let’s zoom in on three high-yield Canadian stocks that can help you get rich over time.  Enbridge  Enbridge (TSX:ENB) is a must-have dividend stock, and there are solid reasons behind that. Besides offering a lucrative yield of 6.7% (based on its closing price of $53.14 on May 10), the company has a resilient business that consistently delivers steady growth.  Enbridge owns extensive midstream assets and transports oil and gas. In addition, Enbridge has interests in renewable energy faci...
Read more

How much dividend income can you earn?

Image
Passive income. It’s one of the most common financial goals for Canadian investors. Everybody likes making money on a stock trade, but what could be better than a stock that pays you income year in and year out? Such are the kinds of stocks that Warren Buffett and other long-term investors made their fortunes on. This raises a question: Is it possible to make a truly substantial amount of money – let’s say $1,000 per month – with just dividend stocks? Such a thing would be very helpful if it could be done. Consider that, $1,000 per month is more than what the average Canadian gets from the Canada Pension Plan (CPP). If you take the average CPP payment ($811) and add $1,000 per month in dividend income to it, you get to a sum of money that could potentially pay all of your bills. In this article, I will explore the topic of making money with dividend stocks. I will show how much money you’d need to invest to get $1,000 a month in dividend income. I will reveal a stock that...
Read more

RRSP Wealth - Two Top TSX Dividend Securities to Buy Now or Own for 25 Year

Image
The market pullback is giving Registered Retirement Savings Plan (RRSP) investors a chance to buy top Canadian dividend stocks at undervalued prices for a self-directed portfolio focused on long-term total returns. TC Energy TC Energy (TSX:TRP)(NYSE:TRP) has raised its dividend in each of the past 22 years, and investors should see the distribution continue to grow at a steady pace. The energy infrastructure giant operates natural gas pipelines, oil pipelines, and power-generation facilities in Canada, the United States, and Mexico. The $28 billion capital program is largely focused on expanding the natural gas pipeline business, which already boasts 93,000 km of infrastructure. TC Energy has assets that connect the Marcellus and Utica shale plays in the United States to the Gulf Coast, where liquified natural gas (LNG) facilities cool the gas to the point where it becomes liquid and can be shipped to international buyers. In Canada, TC Energy is building the Coastal GasLink pi...
Read more