Hello again, Fools. I’m back to call attention to three stocks with low volatility (or low beta) and high dividends. As a reminder, I do this for conservative investors, because low-beta stocks
- tend to provide highly stable dividend income;
- can provide strong portfolio protection during times of market panic; and
- outperform the market over the long run.
Due to a phenomenon called the “low-beta anomaly,” stocks with beta below one actually deliver higher risk-adjusted returns than their high-volatility counterparts.
Thus, low-beta stocks can be perfect for RRSP investors looking to build wealth safely.
Without further ado, let’s get to it.
Kicking off our list is senior home operator Chartwell Retirement Residences (TSX:CSH.UN), which sports a three-year beta of 0.75.
As the country’s largest senior housing operator, Chartwell utilizes its scale — over 200 quality retirement communities in four provinces — and stable business model to deliver steady cash flows for shareholders. In its Q1 results last week, revenue grew 8.4%, same property net operating income increased 4.7%, and funds from operations climbed 10%.
“I am confident that with our focus on driving high rates of employee engagement and customer satisfaction we will continue to deliver long-term, sustainable value to all our stakeholders,” said President and CEO Brent Binions.
Chartwell shares are up about 6.5% in 2019 and offer a healthy dividend yield of 4.1%.
Brookfield operates one of the world’s largest renewable power platforms, with a portfolio consisting of over 17,4000 MW of capacity. In the most recent quarter, funds from operations increased 18% while the company made over $400 million in asset sales.
Management aims to deliver long-term annualized total returns of 12-15%, which includes annual dividend increases of 5-9%.
“We had a strong start to the year as we executed on key initiatives across our business, including delivering operational performance, investing in growth, and bolstering our liquidity position to over $2.3 billion,” said CEO Sachin Shah.
Brookfield shares are up about 19% so far in 2019 and offer a juicy yield of around 6%.
RBC leans on its high operating efficiency, leading market share position in the Canadian banking space, and favourable operating regulatory environment to deliver stable results for shareholders. Even in a challenging Q1, RBC managed to grow income 5%, diluted EPS 7%, and return on equity 70 basis points. Moreover, its common equity tier 1 ratio — a key measure of financial health — improved 11% year over year.
On that strength, management hiked the quarterly dividend 4%.
“Our strategy and unwavering focus on delivering value for our clients and shareholders continues to underpin our ability to consistently deliver solid results, even against a challenging market backdrop,” said CEO Dave McKay.
RBC shares are up 12% in 2019 and offer sport a healthy yield of 3.8%.
The bottom line
There you have it, Fools: three low-beta stocks worth looking into.
As always, they aren’t formal recommendations. View them simply as a starting point for further research. Even low-beta stocks can decline sharply if you don’t pay attention to all the risks, so plenty of due diligence is still required.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Brookfield Renewable is a recommendation of Dividend Investor Canada.