Canadians: Why This Market Crash Could Make or Break Your Investing Success

Market crashes are important times for investors. If you aren’t disciplined and forward looking, you could miss out on major gains for years to come.

| More on:
Mature financial advisor showing report to young couple for their investment

Image source: Getty Images

Market crashes or corrections are a regular occurrence in stock markets, similar to how recessions are normal to the functioning of healthy economies.

Naturally, after a handful of years of positive growth, the economy and markets must correct themselves. This usually happens naturally but can sometimes be caused by a black swan event like we are currently seeing.

Current market crash

This time around, however, things are different, as the market is crashing at a much faster pace. In addition, the economy is facing a major shock. It is unprecedented that so many businesses have shut their doors and stop operating all at once.

What’s even more worrisome is that nobody has a good idea of how long this will last.

No matter what, though, regardless of how bad it will get, eventually we will get over this.

Traditionally, these pullbacks in stock markets happen, on average, once a decade. And for long-term investors, they present the most opportune time to buy stocks.

Because these market crashes don’t happen very often, however, investors need to optimize their investments when they have the chance. That will be crucial for their long-term investing success.

It’s also important not to do anything drastic, like sell your high-quality stocks at these low levels due to panic. Fear is a strong emotion, but selling stocks now is almost the worst thing you can do. Instead, invest funds in high-quality businesses while they are this undervalued.

For example, you could go for a stock like Hydro One right now. Hydro One is a utility that has stable cash flows. Investors like this about Hydro One, which is why the stock has held up better than a lot of others. Investors are betting that Hydro One will be one of the top-performing stocks over the near term, while uncertainty still exists.

However, instead of buying a company like Hydro One, which may outperform in the short term, investors should use this opportunity to buy a high-quality company like Shaw Communications (TSX:SJR.B)(NYSE:SJR) while it’s trading this cheap.

Market crash opportunity

Market crashes always present the best opportunity to buy stocks, and with Shaw, it’s no different. The stock is down more than 30% from its 52-week highs and now has a dividend yield of more than 6.1% as of Thursday’s close.

This is incredible value for a company that operates in such an important industry in our economy. Additionally, Shaw is a great stock to own for the long term due to its growth prospects.

The company has been taking on the Big Three telecoms, trying to capture more market share in the mobile network segment.

Its purchase of Wind Mobile and subsequent re-branding to Freedom Mobile was just the first step. Shaw has also built out a tonne of infrastructure. In addition, it has been offering high-value contracts to customers in a bid to grow its subscribers.

Besides its growth in the mobile segment, Shaw was already a great stock and a reliable company to own.

Its dividend yields more than 6.1% and has a payout ratio that’s less than 90%, giving Shaw some wiggle room in case of more unforeseen headwinds.

After its decline due to this market crash, at its current price and with its long-term prospects, Shaw is one of the most appealing stocks on the TSX today.

Bottom line

A utility like Hydro One may outperform Shaw in the near term, when investors favour utilities and stocks with more predictable cash flow. But over the long term, investors who buy Shaw during this market crash won’t be disappointed, as the stock should outperform for years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »