Weathering Market Storms: Dividend Stocks in Canada as a Safe Harbour

rain rolls off a protective umbrella in a rainstorm

In any given year, the stock market can do many things. Some years, investors will have it easy, and everything will seemingly go up. Other years, the market could tumble, making many investors fearful and decide to stay on the sidelines. And sometimes, the market may not have any direction. Instead, the TSX could bounce up and down, and its stock chart could look more like a series of turbulent waves, as you’d expect to find at sea during a storm.

Through all of the market conditions explained above, investors could rely on dividend stocks as a safe harbour. Historically, dividend stocks have tended to be much less volatile than growth stocks. As a result, investing in dividend stocks could give your portfolio some stability during rougher economic times.

Fortunately for investors, the Canadian stock market offers a plethora of outstanding dividend stocks that are worth considering holding in your portfolio.

In this article, I’ll discuss two dividend stocks that Canadians could consider buying during market storms. I believe they could both do very well in acting as a safe harbour during those times, adding stability to your portfolio.

This is my top pick for a safe dividend stock

When I try to think of a safe dividend stock to hold during turbulent market conditions, Fortis (TSX:FTS) is the first company that comes to mind. Fortis provides regulated gas and electric utilities to more than three million customers across North America. Currently, the company services parts of Canada, the United States, and the Caribbean. Because Fortis operates within the utility sector, investors can rest assured that demand for its services won’t decrease during rough economic times, allowing its business to continue running smoothly.

Looking at Fortis stock, investors should notice that it has a beta of 0.23. If you’re unfamiliar with that term, you should note that it’s simply a measure of how volatile a stock is compared to the broader market. A beta of one indicates that a stock is equally as volatile as the broader market. In this case, a beta of 0.23 indicates that Fortis is much less volatile than the TSX.

In addition to its outstanding stability, Fortis is a renowned Dividend Aristocrat, making it one of the best dividend payers in the country. Fortis has increased its dividend distribution for 50 consecutive years, with plans to continue doing so at a rate of 4-6% through to 2028. This ability to pay a reliable dividend, in addition to its market-beating stability, should make Fortis a very attractive company during market storms.

Another top pick for your portfolio

Canadian National Railway (TSX:CNR) is another dividend stock that Canadians should consider investing in during rough economic times. This company operates nearly 33,000 km of track, making it one of the largest railway companies in North America. Its rail network spans from British Columbia to Nova Scotia, making Canadian National Railway one of the most recognizable companies in the country.

Like Fortis, Canadian National Railway’s beta (0.7) indicates that it’s less volatile than the TSX. In addition, Canadian National Railway is also listed as a Dividend Aristocrat. Its 27-year streak of increasing dividend distributions puts it among the elite dividend stocks in Canada.

The post Weathering Market Storms: Dividend Stocks in Canada as a Safe Harbour appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian National Railway?

Before you consider Canadian National Railway, 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 Canadian National Railway 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’);
})()

More reading

Fool contributor Jed Lloren has positions in Fortis. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy.