It can be hard to think about next year when a recession is looming this year. Investor panic has been leading the markets, sending stocks down even when it’s not necessary.
But I encourage you as an investor to start thinking about 2020. In fact, when investing you should always be thinking about the future, not about what’s going on in the market right now. That said, when something is happening, it’s better to see if you can take advantage of the situation rather than be scared of it.
So while there are a lot of investing mistakes that you could make, the number one mistake that many investors are making right now is that of not taking advantage of a cheap market.
There are blue-chip stocks out there that are trading well below fair value that you should be snatching up at bargain-basement prices.
Even if the markets continue to go down, these companies are likely to be some of the first to go back up. It’s far better to take advantage of cheap stocks while you can rather than wait it out and try to time the markets to get the stocks for the cheapest price possible.
In the meantime, you are most likely going to receive some strong dividends from these stocks that you can reinvest, and would likely make up for any short-term losses that you would see in share price.
With that in mind, here are two stocks I would strongly encourage you to look at for 2020.
If there’s one stock that has been unnecessarily beaten down by the markets, it’s Enbridge Inc. (TSX:ENB)(NYSE:ENB). A poor oil and gas industry coupled with the incoming recession was only the start.
Short-term issues also sent shares down this year, leaving a lot of Enbridge shareholders wondering when the stock might finally rebound.
However, what a poor oil and gas industry proves is that companies like Enbridge are needed now more than ever. Enbridge has $16 billion in growth projects scheduled to be online by 2021, with $3 billion in growth projects after that.
Once those pipelines are up and running, the oil and gas industry should be back and then some. Companies like Enbridge stand to make serious cash when that happens.
Enbridge already has long-term contracts that would see a steady stream of cash flow come in for decades. That means its 6.3% dividend yield is completely safe for investors who are buying today.
All of this is to say that at a share price of around $46 as of writing, the stock is a huge bargain for even just reaching fair value, never mind when all of these projects are finally running.
The Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) might not be your first choice as a bank stock heading into a recession. This Canadian bank is the most exposed to the Canadian market, so when it goes down, expect CIBC to drop along with it.
However, CIBC is still a Canadian bank. Canadian banks fared as some of the best in the world during the last recession, and this one isn’t going to be anywhere near as bad.
Thus, it might be best to take advantage of the low share price and see huge returns over the next few years. In the meantime, CIBC offers the best evidence of the Canadian banks at 5.21% as of writing.
Beyond its dividend, it’s not as if CIBC is doing poorly. In fact, its latest earnings reports surprised investors with some fairly positive results. So while this bank might not do as well as some of the other topics in Canada, it doesn’t look like it’s going to perform all that badly either.