On Wednesday, the S&P 500 plunged by nearly 100 points, or more than 3.2%, while the TSX Index, Canada’s benchmark for publicly traded companies, fell another 2.1%, continuing a decline that has seen it shed more than 6% of its value since the middle of July.
But what’s even more concerning than a single day’s trading session is that now the TSX Index is trading below its 200-day moving average, while Wednesday’s sell-off sent the S&P 500 sharply below its 50-day moving average.
This is important because the breach of both of those indicators has historically at least been a telling signal that things may get worse before they get better.
In the meantime, if you’re looking for a low-risk alternative to park your money until the smoke clears, these three companies more than fit the bill.
Not only do all three pay attractive, healthy dividends, but all three also hold leadership positions in some of Canada’s most mature, stable, and profitable sectors.
BCE (TSX: BCE)(NYSE: BCE) stock currently yields shareholders a solid 5.88% dividend yield following a minor sell-off that has seen the shares decline from their 52-week highs just shy of $60 on the TSX to now just a little more than $50.
Following a 5.2% hike to its payout in 2018, investors considering a purchase in BCE stock should know that its payout ratio, reported to be just under 100%, is very misleading in that it doesn’t at all represent the strong underlying cash flows the company consistently generates year in and year out.
The fact that Canada’s telecom industry is so well protected from the threat of new competitors entering the market only serves to add to the security investors will get from an investment in BCE.
Royal Bank of Canada (TSX: RY)(NYSE: RY) has been Canada’s largest financial institution for a while now and, more recently, has leveraged the strength it has historically enjoyed in its home market to establish strong positions in several key international markets.
That’s helped lead Royal Bank to becoming one of the largest financial institutions globally today.
By diversifying its business into other key markets, this is has gone a long way to making it less reliant on the Canadian market alone.
In light of some fairly disturbing reports about the state of Canadians’ household finances, that might prove to be a very wise decision should the country be at risk of heading into a recession.
Meanwhile, RY stock yields investors 3.80% and is supported by a conservative 45% payout ratio.
Under the leadership of former CEO Ed Clark, Toronto-Dominion Bank (TSX: TD)(NYSE: TD) make a big splash nearly a decade ago when it acquired a string of U.S. retail franchises along the eastern seaboard. Similar to the moves by its slightly larger rival Royal Bank, that’s helped to make TD less vulnerable to a slow-down in the Canadian market.
It’s also increased the bank’s exposure to the U.S. lending market, which should get a lift if the U.S. central bank follows through with its plans to raise interest rates multiple times over the next 12 months.
TD stock is currently yielding 3.51% with a payout ratio of just 43%.
