It’s been an incredibly difficult time for investors. After going through a pandemic and supply-chain issues affecting our way of life, we have this ongoing economic volatility. The market may be improving since November started, but just barely. We’re still fairly close to 52-week lows, and no one knows how long this will continue to drag on.
That’s why it’s still a great time to get defensive — not just right now but long term. And here are the best sectors and stocks to help you out.
If there is anything out there that’s essential, it’s utilities. These are the companies that power our very way of life, providing power to everything from the sink you turn on in the morning to powering up the computer you use at work.
This is why utility stocks surged when the market started to drop. Canadians wanted safety and flocked to the industry. However, they flocked too much and drove shares upwards, causing an overcorrection. Now, it’s a great time to buy once more.
When it comes to utility stocks, however, there are two I would consider the best defensive stocks. That’s Canadian Utilities (TSX:CU) and Fortis (TSX:FTS). These two defensive stocks have the longest history of dividend increases on the market. Both are Dividend Kings, with over 50 years of consecutive dividend increases.
This is an important note because it shows the company’s ability to fund those dividends with its strategic acquisitions. It’s able to identify opportunities for more revenue and use that revenue for growth in more revenue and dividends. You can now pick up both stocks for stable dividend income and provide your portfolio with great defensive stocks in the process.
We also learned during the pandemic that healthcare will always be essential as well. But this can indeed be a tricky sector. While some parts of healthcare are essential, others … not so much. We may not want to invest in a company creating drugs for lower blood pressure. But we will want to invest in a retail stock that provides everyday essentials.
That would include healthcare stock Jamieson Wellness (TSX:JWEL). The company is a healthcare retail stock that provides vitamins and mineral products to Canadians and has for years. It continues to be a defensive stock that investors should consider, especially with a 3.34% dividend yield to grab today. And with earnings around the corner, you could be in for a quick boost as well.
When it comes to consumer staples, again, this can be tricky. There are certain items we are always going to need, but some aren’t as obvious as others. For instance, one thing consumers will now always need is software.
Granted, I’m not talking about the next big thing — a risky tech stock you could buy up and potentially grow. No, I mean software tycoon Constellation Software (TSX:CSU). This tech stock has proven its worth again and again, climbing steadily through recessions, downturns, and a pandemic to stay on top.
That’s because the company focuses on essential software we need for daily life. Because of this, it’s managed to achieve a large amount of revenue not just to invest in new acquisitions but also to create spinoff companies. That brings me to the other stock I would buy: Topicus.com (TSXV:TOI). This is like Constellation 2.0, but you’d be getting in on the ground floor. Furthermore, it provides the same structure and management team but in Europe.
You can see for yourself that investors continue to believe in both of these stocks’ strong futures. That’s why it and the rest of these defensive stocks can certainly help your long-term growth portfolio.
Before you consider Constellation Software, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and Constellation Software wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 10/10/23
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
- 1 Tech Stock You’ll Be Glad You Bought When the Bull Market Starts
- A Canadian Dividend Stock to Hold Forever in Your TFSA
- How Much Should You Invest to Retire a Millionaire?
- Treat Yourself to 3 Investing Tricks and Watch Your Wealth Grow
- Canadian Dividend Aristocrats: The Backbone of Reliable Investing
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Topicus.com. The Motley Fool recommends Constellation Software and Fortis. The Motley Fool has a disclosure policy.