3 Ways to Reduce Risk in Your Canadian Stock Portfolio

Badger Daylighting Ltd. (TSX: BAD) and two other stocks may be getting overlooked by investors seeking secure stocks ahead of a downturn.

| More on:
Businessmen teamwork brainstorming meeting.

Image source: Getty Images

When a global investment management firm like Goldman Sachs starts getting cold feet about the U.S.-China trade outlook, it’s probably time to start taking notice. “We expect tariffs targeting the remaining $300 billion of U.S. imports from China to go into effect,” the bank has warned clients, essentially nixing the idea of a Sino-American trade deal before late 2020.

Fear is stalking the markets, and the prospect of a U.S.-led recession is starting to gain mainstream attention.

Three “safe” areas to keep your wealth protected

A darkening outlook for the global economy will have investors reaching for gold and utilities, but are they overlooking the wonderful stock that is Badger Daylighting (TSX: BAD)?

Tedium is king in a turbulent economy, and this excavation ticker fits the bill just right. Having gleaned an extra 30% of upside since May, and packing a recession-ready punch with its extremely healthy balance sheet and great outlook.

Add this stock to a recession portfolio not only for its for its dividend yield of 1.38%, but also for its huge growth potential in the United States.

For a mix of defensive passive income and a penetrating business model, Badger Daylighting is a solid buy that could weather even a fairly severe downturn.

From food to finance, these sectors are solid

While regulated utility stocks are a go-to for spooked investors, agri supplies may get overlooked despite the fact that people still need to eat during a recession.

That’s why Nutrien (TSX: NTR)(NYSE:NTR) is a top choice for a downturn-hardy stock portfolio. Pumping out 26 million tons of potash, nitrogen and phosphate, the mining-cum-food stock also represents over 1500 retail outlets spread across seven countries.

A dividend is on offer, meaning that investors taking a long position can cream the passive income (to the tune of 3.57%) while waiting to cash in.

Being diversified across its mining and retail operations, Nutrien can offer a bit of extra stability to spooked investors looking for a stock to hide – and grow – their cash during even a potentially deep correction.

Money makes the world go round, as they say, and the planet won’t simply stop turning just because the markets have crashed.

That’s why big business is pretty much always a good area to invest in, with global holding companies like Power Financial (TSX: PWF) exhibiting enough clout to keep your wealth relatively safe even when the wolves are at the door.

From Great-West Life to IGM Financial, Power Financial’s holdings represent some of the very best investments that can be made in the world of Canadian finance.

The bottom line

At the end of the day, investment is often an emotionally-driven pursuit, and one’s disposition towards the future has a large bearing on how individuals purchase shares on the TSX.

There could well be a tipping point on the horizon that will demarcate the transition into a bear market, and with the threat of recession becoming a mainstream concern, investors will have to check what they’re holding and ask one question: Do you feel lucky?

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 Victoria Hetherington has no position in any of the stocks mentioned. Nutrien and Badger Daylighting are recommendations of Stock Advisor Canada.

More on Dividend Stocks

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

2 Interesting Buys in Any Market

Here are two intriguing buys in any market climate that offer defensive appeal as well as growth and income earning…

Read more »

Dividend Stocks

TFSA Investors: 3 TSX Stocks for Tax-Free Passive Income

These Canadian corporations have strong visibility over future earnings and dividend payouts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Lazy Landlords: 3 Cheap Canadian REITs to Buy in May 2022

You can become a passive landlord today by investing in Canadian REITs. Here are three cheap REITs to consider this…

Read more »

Target. Stand out from the crowd
Dividend Stocks

4 High-Yield TSX Stocks to Buy Ahead of Their Ex-Dividend Dates

If you have some cash lying idle, consider these high-yielding TSX stocks.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Passive Income: 3 TSX Stocks With Rapidly Growing Dividends

Worried about inflation? Here are three passive-income stocks to buy that pay rapidly growing dividends.

Read more »

Family relationship with bond and care
Dividend Stocks

Retirees: 4 Safe Stocks to Buy for Decent Passive Income

Retirees can offset the impact of runaway inflation by buying safe dividend stocks to create more cash flows.

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

3 Canadian Energy Stocks to Buy for Reliable Passive Income

Canadian energy stocks are gushing cash. Here's three top stocks that are perfect buys for reliable passive income.

Read more »