If you want to find safe stocks to invest in, one metric you’ll want to look at is beta. A stock’s beta value is a measure of how volatile it is in relation to the market. For instance, stocks that have a beta of more than one are more volatile than the market, and on average will see bigger swings.
The higher the number goes, the bigger the swings in comparison to the market. In contrast, the closer the beta value gets to zero, the less volatile the stock.
This is particularly useful if you’re looking at dividend stocks and want to earn a good return without worrying about taking on too much risk. The tricky part is that beta can change over time, and so in some respects it can end up being a moving target. Currently, the three stocks below trade at beta values below one and pays dividends.
Cineplex Inc (TSX:CGX) has a beta value of 0.29, suggesting that investors might be well off holding the stock for its dividend, which currently yields more than 5.1%. Year to date, the stock has declined by 9%, but it has made progress in recent months, climbing more than 11% since the end of June.
Despite there being long-term concerns about the future of movie theaters, Cineplex has continued to grow its sales and has looked at innovative ways of trying to bring customers in and creating a more enjoyable experience for not only watching movies, but sporting events as well.
It’s still too early to tell how successful its “Rec Room” experience will be, but the company remains successful despite the most challenging of odds.
Cineplex could prove to be a good buy, as it has strong fundamentals and a great dividend. There’s clearly still demand for a night out at the movies, and as long as that’s the case, Cineplex will remain a good investment option.
Leon’s Furniture Limited (TSX:LNF) follows the market relatively closely with a beta of 0.94. In the past 12 months, the stock has declined a little under 4%, but over the last 10 years, it has risen by more than 55%.
The furniture store is a popular choice among many Canadians, and as attractive as online shopping may be for consumers, buying furniture is still something that many people still like to do in person.
The company has been able to grow its revenue steadily over the years, and with a decent bottom line, it can provide investors with a lot of consistency from one year to the next. In addition, Leon’s pays investors a modest dividend of 3.2%, which can help boost overall your overall returns.
MTY Food Group Inc (TSX:MTY) falls in the middle of these three stocks with a beta value of 0.75. The company owns some well-known restaurant chains across the country, and in four years has seen its sales nearly triple and continues to add more brands into its portfolio.
With a strong profit margin, MTY has a lot of room to grow, and with a dividend yield of just under 1%, there’s potential for this payout to grow in the future.
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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of MTY Food Group. MTY Food Group is a recommendation of Stock Advisor Canada.