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3 Recession-Proof Stocks to Buy Before the Next Market Crash

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It can be difficult, if not impossible, to predict when the next market crash may occur. But that makes it all the more important to protect your portfolio today and insulate it as much as possible so that you don’t incur significant losses if a crash does end up happening. Below are three stocks that can be great buys that you can ride through a recession.

Telus (TSX:T)(NYSE:TU) is a great investment to own, as the stock isn’t very volatile, and it can be a great source of dividends for your portfolio. With a beta value of around 0.6, shares of Telus don’t fluctuate as wildly as the market as a whole does, and that’s important for investors who are looking to avoid a roller-coaster ride should things get tough.

While that doesn’t guarantee Telus won’t fall in price during a recession, given its strong fundamentals and the stock trading at only 19 times earnings and three times book value, it’s not as likely to see as big a correction as other, more expensive stocks on the TSX. Even in 2019, which was a fairly bullish year for the markets, Telus shares rose just 11%, underperforming the TSX’s returns of more than 19%.

With a dividend of 4.3%, any drop in Telus’s share price could at least be partially offset by its stable payouts.

Hydro One (TSX:H) was off to a slow start when it began trading in the markets in 2015, but last year the stock was up around 24%, as it looks to have found some new life. While Hydro One has been plagued by controversy involving the Ontario government, with such a significant and conservative shareholder influencing its operations, the good news is that investors shouldn’t expect Hydro One to take on any significant risks.

It’s a stable business with lots of recurring revenue, and at 0.12, it has an even lower beta than Telus, as the stock almost completely ignores the market’s movement. It too pays a dividend, and at 3.5% it’s another way for investors to either pad their overall returns or at worse, offset losses during a downturn. Trading at less than two times its book value, Hydro One is another good value buy for investors who don’t want to pay too much of a premium in what’s a very strong bull market.

Thomson Reuters (TSX:TRI)(NYSE:TRI) rounds out a third industry that you can hold in your portfolio to add a bit more diversification to your holdings. In an era where information is heavily scrutinized and people are more concerned than ever about what’s real and what’s not, a brand like Thomson Reuters stands out from its peers for its reliability, and that’s why its services are likely to continue to be in demand regardless of if there’s a recession or not.

That’s no more evident than in the stock’s performance last year where it rose 40% and outperformed the other stocks on this list. Even in 2020, that rally has not stopped with Thomson Reuters soaring 14.5% during the first month of the year. However, even with the impressive returns, the stock is still trading at only 17 times earnings. While its dividend of 1.7% may be underwhelming for some income investors, it can still help add to the total income you earn from holding these investments.

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 David Jagielski has no position in any of the stocks mentioned.

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