Are You in Panic Mode? These 3 Stocks Will Beat the TSX in 2019

The market has been extremely volatile, and investors are getting anxious. Consider adding stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to beat the TSX.

| More on:

It has been a wild ride in 2018. There hasn’t been this much volatility in the market for years, and price swings of +2% are not uncommon. For those who are risk averse, it can be unnerving. Unfortunately, it’s when emotions take over that investors make mistakes. Quad Group’s chief strategist Peter Borish said it best in a recent interview, “I feel like we’re rats on a sinking ship. They all run to one side thinking something good is going to happen and it doesn’t, and then the wind shifts and so we all run to the other side.”

The best way for investors to protect themselves is to invest in high-quality stocks with a large market capitalization and a growing dividend. If you’re worried about continued volatility into 2019, consider adding Toronto Dominion Bank (TSX:TD)(NYSE:TD), Power Financial (TSX:PWF), and Fortis (TSX:FTS)(NYSE:FTS) to your portfolio.

Low-beta stocks

Beta is an indicator that measures a stock’s volatility in comparison to the market. A beta below one signifies that the company is less volatile than the market and uncorrelated. A ratio above one is quite the opposite. It usually means the company moves in tandem with the market, but with greater price swings. Hence, it’s more volatile.

All three of the companies above have betas below one. This is not surprising, as they are all stocks in the upper echelon of their respective industries. Toronto-Dominion and its beta of 0.86 has been Canada’s best-performing bank for years. Fortis, with a beta of 0.6  has also been an overachiever in its industry. On the flip side, despite underperforming, Power Financial is one of the most respected names in the industry and has a beta of 0.75.

High-yield stocks

Thanks to the most recent market downtrend, all three have attractive yields. Power Financial leads the group with hefty 6.41% yield, almost double that of its yield from a couple of years ago. TD Bank is also offering investors a yield (3.74%) not seen in years. Finally, Fortis is yielding 3.67%. Although not as high as earlier this year, it is still above its historical averages.

Dividend-growth stocks

A high yield is nice, but when coupled with a growing dividend, it becomes even more attractive. Fortis and TD Bank are both Canadian Dividend Aristocrats — stocks that have a history of raising dividends for five or more consecutive years. Toronto-Dominion has a seven-year streak and the highest dividend-growth rate in the banking industry. Fortis owns Canada’s second-longest dividend-growth streak at 45 years. It expects to continue this streak, as it has a targeted 6% dividend annual growth rate through 2022.

Power Financial used to be one of the most reliable dividend-growth companies in Canada. Then the financial crisis hit and it suspended dividend growth for a number of years. Although it has taken it longer to return to growth than some of its peers and the banks, the company is on the verge of becoming an Aristocrat once again. Power Financial has a four-year dividend-growth streak with a 5% average annual growth rate.

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 Mat Litalien is long Toronto-Dominion Bank, Fortis Inc and Power Financial Corp.  

More on Dividend Stocks

Confused person shrugging
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $625 Per Month?

This retirement passive-income stock proves why investors need to always take into consideration not just dividends but returns as well.

Read more »

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

Secure Your Future: 3 Safe Canadian Dividend Stocks to Anchor Your Portfolio Long Term

Here are three of the safest Canadian dividend stocks you can consider adding to your portfolio right now to secure…

Read more »

money goes up and down in balance
Dividend Stocks

Is Fiera Capital Stock a Buy for its 8.6% Dividend Yield?

Down almost 40% from all-time highs, Fiera Capital stock offers you a tasty dividend yield right now. Is the TSX…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Use Your TFSA to Double Your TFSA Contribution

If you're looking to double up that TFSA contribution, there is one dividend stock I would certainly look to in…

Read more »

woman looks at iPhone
Dividend Stocks

Retirees: Is TELUS Stock a Risky Buy?

TELUS stock has long been a strong dividend provider, but what should investors consider now after recent earnings?

Read more »

Concept of multiple streams of income
Dividend Stocks

Is goeasy Stock Still Worth Buying for Growth Potential?

goeasy offers a powerful combination of growth and dividend-based return potential, but it might be less promising for growth alone.

Read more »

A person looks at data on a screen
Dividend Stocks

How to Use Your TFSA to Earn $300 in Monthly Tax-Free Passive Income

If you want monthly passive income, look for a dividend stock that's going to have one solid long-term outlook like…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Passive Income Seekers: Invest $10,000 for $38 in Monthly Income

Want to get more monthly passive income? REITs are providing great value and attractive monthly distributions today.

Read more »