My Top 10 Long-Term Stock Picks for Defensive Investors

My top 10 picks for defensive investors include a number of unique long-term growth picks, such as Spin Master Corp. (TSX:TOY), to defensive plays in the REIT sector, such as Killam Apartment REIT (TSX:KMP.UN).

| More on:

Get started today reminder note

The world of investing is a difficult one to navigate. The sheer number of options available on North American exchanges in various investment categories and sectors is enough to make any investor’s head spin. I’ve decided to narrow down the list of available options to 10 top picks for long-term defensive investors to consider in a range of sectors to suit a range of investor preferences.

Here we go.

Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) is an excellent pick for long-term investors looking for an excellent dividend yield in a defensive sector. The utilities space is one that has been hampered of late due to a rising interest rate environment in North America, but Algonquin has outperformed its peers for some time due to the strength of its management team and its unique growth profile supported by continued acquisitions, providing additional diversification for investors looking for broad North American exposure.

In the same defensive category, Fortis Inc. (TSX:FTS)(NYSE:FTS) provides investors with another strong dividend yield coupled with growing exposure to the U.S. market given its recent acquisition of WGL Holdings. Fortis has grown its dividend for more than four decades and continues to provide one of the best long-term track records on the TSX for defensive long-term investors.

In the airline space, few companies remain as attractively valued as Air Canada (TSX:AC)(TSX:AC.B), with substantial room remaining for valuation multiple expansion. Air Canada has continued to grow its earnings. In its most recent earnings report, the company doubled its bottom line. That’s a testament to the strength of the turnaround at this high-performing airline.

Killam Apartment REIT (TSX:KMP.UN) is one of the best REITs available to investors considering adding exposure to the Canadian apartment sector — a niche which tends to be the most defensive in the REIT space due to the fact that cash flows and earnings are much less elastic than those in the commercial or retail space.

Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) is an excellent growth play in the defensive telecommunications sector due to the company’s small, yet nimble corporate structure, enabling the company to aggressively pursue market share held by the oligopoly in the highly profitable Canadian telecom space.

Canadian Tire Corporation Limited (TSX:CTC.A) is one of the few retail companies I would suggest defensive investors take a look at, given its unique business model and focus on branding many of the third-party products it sells in a bid to further increase profitability. Canadian Tire is attractively valued, with excellent fundamentals supporting further growth in the Canadian marketplace.

In the same category as Canadian Tire, I would recommend that long-term defensive investors consider Costco Wholesale Corporation (NASDAQ:COST) as a core holding due to the company’s unique and insulated business model. Dipping substantially since the Whole, Inc. merger was announced, Costco now provides an attractive entry point for long-term investors to buy the once-pricey retailer.

One of the best growth plays on the TSX right now has to be Spin Master Corp. (TSX:TOY) given the company’s intellectual property and growth prospects outside North America. With earnings coming in much higher than expected for traditionally less-profitable quarters, I expect Spin Master to continue to outperform in Q4 2017 and beyond.

With a strong pipeline of products set to be released and a brand equity/loyalty profile, which remains unparalleled, Apple Inc. (NASDAQ:AAPL) is perhaps the best growth company available, bar none. Recent reports that the company’s highly anticipated iPhone X sold out on launch day have decimated expectations that demand wouldn’t be as robust as expected moving forward. Analyst expectations of a 12-month stock price above $200 should not be overlooked here.

A commodities company with minimal exposure to oil prices, Enbridge Inc. (TSX:ENB)(NYSE:ENB) stands out as one of the best energy infrastructure companies available to investors. With an excellent yield and a company mandate to continue increasing dividend distributions over time, I expect the company’s solid portfolio of assets to continue to provide upside, regardless of the near-term movements of the broader stock market.

Stay Foolish, my friends.

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 Chris MacDonald has no position in the companies mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon and Apple. The Motley Fool owns shares of Amazon, Apple, and Enbridge and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. Enbridge is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »