After the dismal end to 2018, many investors are looking to re-balance their portfolios with safer, if not more defensive options. Fortunately, the market provides us with plenty of fine candidates for consideration, and the following three companies are perfect examples of great additions for both income- and growth-seeking investors.
Fortis (TSX:FTS)(NYSE:FTS) remains one of the most well-known and respected utilities on the continent. The company has swelled in size over the past few years thanks to a series of large acquisitions that have positioned the company to be one of the top 15 utilities on the continent, with 10 different operations across Canada, the U.S., and in several Caribbean nations that serve 3.3 million customers.
Much of the appeal of utilities comes in the form of the stable and recurring source of revenue that is secured through regulatory contracts known as power-purchase agreements, or PPAs. The PPA stipulates how much of the utility is to be sold for, how much the company is to be reimbursed for that utility service provided, and for how long the contract remains in effect, which can be as long as several decades.
In addition to that steady stream of income, Fortis also provides investors with a handsome quarterly dividend that currently yields a solid 3.99%, which has been hiked on an annual basis for well over four decades.
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has grown in popularity over the past few years, particularly as a growth strategy set into motion over a decade ago finally came to fruition. In the years following the Great Recession, TD managed to acquire a string of smaller regional banks along the east coast of the U.S. and steadily re-branded them under a single TD banner. The result is that today TD has more branches in the U.S. than in Canada, with a branch network that spans from Maine to Florida.
With the U.S. economy roaring to new levels over the past few years, that expansive network has provided strong returns for TD, which has translated into strong growth for the bank that has surpassed its peers.
Prospective investors who are thinking that the good times won’t last much longer in the U.S. market and are concerned about the impact of a slowdown on TD can take solace in the fact that TD is an incredibly stable institution. Canadian banks are more regulated and therefore less susceptible to a crisis than their American peers. In fact, the last time the Canadian banking sector faced a crisis was back in 1839.
In terms of a dividend, TD offers a quarterly payout with an appetizing yield of 3.96%. While this may sound low in comparison to its big bank peers, TD has maintained a healthy growth rate over the past decade that has averaged out to nearly 10%, and given the strong results over the past few years, that trend is likely to continue for the foreseeable future.
Exchange Income (TSX:EIF) may seem like an odd addition to this list, but the company is in many ways much more diversified and unique than the other two companies I mentioned. Exchange Income offers not only a very appetizing monthly distribution with an eye-opening yield of 7.89%, but also happens to cater to a very underserved, yet necessary component of the economy.
Exchange Income owns over a dozen different subsidiary companies, which can be broadly classified into aviation services and manufacturing companies. On the aviation side, the company owns several regional airlines and cargo companies, all of which serve remote regions of the country with little competition, or provide necessary surveillance or medevac services. Turning to the manufacturing side of the company, Exchange’s subsidiaries also fall within that same limited competition/necessary niche, with some examples being sheet metal fabrication, cell phone tower construction, and component assembly systems for the defence and aerospace industry.
