2 Tried-and-True Stocks to Buy for a Looming Bear Market

The threat of recession has diminished but Is not completely gone. Bank of Montreal stock and Fortis stock are the top recession-proof investment options.

U.S. and China seem to be on the verge of a signing trade deal. According to a Chinese news agency, both parties have reached a principal consensus. The report significantly lessens the panic over a recession. However, investors remain wary, as things can get out of hand again.

One market observer said that the two largest economies in the world will reach a real trade deal only if there is a global market crash or banking crisis similar to the events leading to the 2008 financial crisis. Only then would the U.S. and China make impossible deals come true.

Regular investors can’t be complacent, as the threat of recession is still present. While everyone is optimistic about a favourable outcome, you need to take a defensive position.

If you plan to do a reallocation of stocks, be sure to retain Bank of Montreal (TSX: BMO)(NYSE: BMO) and Fortis (TSX: FTS)(NYSE: FTS).

Pioneer dividend payer

You shouldn’t pass up on BMO at any time, because paying dividends has been its tradition for 190 years. Retirement planners, income seekers, and dividend investors during the 2008 financial crisis still hold the stock.

Taking a position BMO in preparation for the coming recession is a logical choice. It’s hard to ignore the bank’s unbeatable record of dividend payments. Because BMO was the first Canadian company to pay dividends, it will likely continue making the payouts when other stocks have stopped paying.

The narrative is exaggerated, although it describes the friendliness of the bank and its commitment to keep paying shareholders dividends. In each of the last four years, both revenue and earnings have increased. The 4.9% growth estimate of analysts in 2019 is consistent with BMO’s current run.

BMO will remain financially healthy for decades to come. The 4.23% dividend that investors are enjoying today is safe and sustainable. There’s no need to expound.

The fear of a recession can sometimes be more worrisome than the recession itself. You have no way of finding out when or how it will begin. Also, you have no idea as to its impact on your financial situation. You will only find out when the recession is at hand.

Lessen your anxiety

But you can overcome the fear of recession or lessen your anxiety by sticking to Fortis. Many long-term investors have stuck with this prime Canadian regulated electric utility company through thick and thin. If you’re buying the stock today, you won’t be selling your shares.

Fortis is not the highest dividend payer on the TSX. Its 3.5% yield is probably only one-fourth of the highest dividend-paying stock. Nonetheless, your source of extra income during a recession will not dry up.

More importantly, your capital is safe in a low-risk business. You won’t see an end to the stream of cash flows that come from five provinces in Canada, nine states in America, and three countries in the Caribbean.

Buy and hold

Don’t be lulled into complacency with the press releases that a trade deal is forthcoming. Be on guard but stay invested in BMO and Fortis for peace of mind.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

looking backward in car mirror
Dividend Stocks

A $14,000 TFSA Investment Strategy for Lifelong Monthly Retirement Income

Given their reliable dividend payouts, high yield, and healthy growth prospects, these two monthly-paying dividend stocks are ideal for income-seeking…

Read more »

Aerial view of a wind farm
Dividend Stocks

How Much to Invest in Enbridge for $500/Quarter in Dividends

Enbridge is one of Canada's best-known dividend stocks with an attractive 5.8% yield. Here's how to earn $500/quarter by owning…

Read more »

woman relaxes with phone
Dividend Stocks

BCE Cut its Dividend: Has the Stock Become a Better Income Investment?

BCE’s new payment offers income, but cash after spending still has to support the recovery.

Read more »

woman looks at iPhone
Dividend Stocks

Want an Average of $100 a Month From Sun Life? Here’s How Many Shares You’d Need

Sun Life’s new dividend turns a $100 monthly-average goal into a clear 300-share purchase.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

How I’d Structure a $20,000 TFSA for Steady Income, Stock by Stock

I would structure a $20,000 TFSA around top Canadian dividend stocks backed by resilient business models and a growing earnings…

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

Maxed Out Your TFSA? The Next Best Account for Canadian Dividend Tax Savings

If you’ve maxed your TFSA, you can consider the FHSA or the RESP for tax-advantaged investing.

Read more »

customer comparison shops in liquor store
Dividend Stocks

Dollarama’s Small Dividend Isn’t the Main Reason I’d Consider the Stock

Dollarama’s growth business deserves attention, but the valuation can absorb years of progress.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Use a TFSA to Generate $400 in Monthly Tax-Free Income

Want to earn $400 a month tax free in your TFSA? See how Timbercreek Financial and Diversified Royalty could get…

Read more »