3 Low-Volatility Stocks to Buy and Hold for 20 Years

Looking for stable stocks to protect your portfolio? Here’s why you need to check out Fairfax Financial Holdings Ltd (TSX:FFH), Intact Financial Corporation (TSX:IFC), and Emera Inc (TSX:EMA).

| More on:
Growing plant shoots on coins

Image source: Getty Images

During a bear market, it can pay big to own low-volatility stocks. It can take you years to recover from a major loss.

Protecting your portfolio’s downside is important no matter your age or situation. Retirees need to avoid losses to ensure a stable income, while younger investors need to maintain value to compound returns as quickly as possible.

If you want to diversify your portfolio with low-volatility stocks, the following picks are perfect candidates. During previous drops, these stocks held steady while the market plummeted by 30% or more.

Intact Financial

Intact Financial (TSX:IFC) is one of the largest property and casualty insurance companies in Canada. The company was formerly ING Canada, a subsidiary of ING Groep NV, until it changed its name in 2009.

Over the last decade, Intact Financial has never finished a year with a loss. Plus, it’s returned more than 230% versus a mere 55% return for the S&P/TSX Composite Index.

What makes this company so stable?

First, the insurance business is fairly predictable. Most risk can be forecasted ahead of time and pools of policies can offset each other’s volatility. Second, the company has a pristine balance sheet with high scores from every credit-rating agency. Last, management is aligned with shareholders, with one of the top governance scores in all of Canada.

With a solid dividend yield of 2.4% and a reasonable valuation of 22 times trailing earnings, Intact Financial looks like a safe place to hide during a market storm.

Fairfax Financial Holdings

Fairfax Financial (TSX:FFH) has one of the best track records of any stock at avoiding bear markets. Founded and run by famed investor Prem Watsa, this company has rightfully earned the title Berkshire Hathaway of the north.

Take the 2008 and 2009 financial crisis for example.

From August 2008 to February 2009, the S&P/TSX Composite Index lost more than 30%. Fairfax Financial stock, meanwhile, gained 30%. This outperformance is truly remarkable.

Just because Fairfax Financial outperforms mightily during bear markets doesn’t mean it’s a slouch when the market is moving higher. Since 1985, book value per share has grown by nearly 19% per year. That’s roughly the average annual return of the stock as well.

With a market cap of only $17 billion, expect Fairfax to continue business as usual over the next few decades and beyond.


Emera (TSX:EMA) is another fortress-like stock thanks to its durable business model.

As I wrote previously, “Down years have been rare, and never in its nearly 30-year public history has the company cut its dividend. Even during the global credit crisis of 2008 and 2009, Emera actually grew stronger.”

The secret is regulated utilities.

Emera provides power to roughly 2.5 million customers in nine markets across North America. Critically, 95% of revenues are fully regulated. That means Emera has long-term contracts that guarantee its rate base and pricing.

Each year, Emera has near certainty into its profitability. This certainty often extends a decade or more into the future. Last year, only 88% of revenues were fully regulated, so Emera has doubled down on its commitment to stability.

As with Intact Financial and Fairfax Financial, this stability hasn’t come at a cost to returns. Since 2006, shares have risen by 150% compared to a 35% rise for the S&P/TSX Composite Index.

Now trading at a discounted valuation of just 16 times trailing earnings and a dividend yield of 4.5%, now looks like a great time to pile into this proven stock.

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.

The Motley Fool owns shares of Berkshire Hathaway (B shares). Fool contributor Ryan Vanzo has no position in any stocks mentioned. Intact and Fairfax are recommendations of Stock Advisor Canada.

More on Dividend Stocks

Dividend Stocks

3 Expensive TSX Stocks I’d Buy if They Took a Dip

Three relatively expensive large-cap stocks are on my buy list if their prices dip in the next market correction.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How I’d Invest $1,000 in October to Generate Passive Income for Life

You can earn reliable passive income each year by investing $1,000 in this Canadian dividend stock right now.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

TFSA: Invest $45,000 in These 3 Stocks and Get $2,392 in Passive Income

Here are three of the best Canadian dividend stocks TFSA investors can consider buying right now to earn handsome passive…

Read more »

Modern buildings in business district
Dividend Stocks

3 REITs Offer a Good Mix of Growth Potential and Dividends

The real estate sector in Canada is still heading downwards, and the stocks are mimicking the pattern, so you can…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

2 of the Best Dividend Stocks to Buy for Growing Passive Income

If you're building a long-term portfolio, these two dividend stocks are some of the best investments to buy for growing…

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Create $500 in Tax-Free Passive Income With $0 in the Bank

Even if you don't have a cent to invest, you can start creating passive income to allow you to create…

Read more »

Dividend Stocks

Passive Income: 2 Dependable Dividend Stocks to Buy Today and Own Forever

Now’s a great time to think about building a passive-income stream. Here are two dividend stocks to have on your…

Read more »

Dividend Stocks

3 Dirt-Cheap TSX Stocks (With +5% Yields) to Buy Right Now

Here are three dirt-cheap TSX stocks that trade with elevated dividend yields and solid growth prospects ahead.

Read more »