Concerns surrounding the coronavirus have had a disastrous impact on the markets in the past few weeks. And while all sectors have felt the impact, there are some stocks that investors can put in their portfolios that should be able to weather the storm better than others. Here are two stocks that can be great additions to your portfolio and that can minimize your exposure to a downturn and market crash:
Emera Incorporated (TSX: EMA) is a good stock to own for a few reasons. For one, it’s a utility stock that provides necessary services to people whether they are traveling or not, and regardless of whether they’re cutting back on spending or not; utilities are a necessity.
The company released its year-end results in February. Emera recorded $6.1 billion for 2019, which was down from the $6.5 billion it generated in the prior year. However, the company blames “weak market conditions” in the New England market as part of the reason for the lacklustre results but President and CEO Scott Balfour is optimistic for the future. “In 2020, we look forward to the closing of the Emera Maine transaction, and redeploying capital from our asset sales into our businesses which are driving a rate base growth forecast of 7% through to 2022.”
The company currently pays investors a quarterly dividend of $0.6125, good for an annual yield of 4.2%. That can be especially important at a time when stocks are not doing well as it can help maximize the stock’s returns. With a beta value of just 0.3, investors shouldn’t expect the same volatility from the stock that we’ve seen in the markets. That’s good news because it means that the market may not drag Emera down along with it.
Waste Connections Inc (TSX: WCN)(NYSE: WCN) is another stock that provides a necessary service for customers and that pays a dividend as well. Waste management may not be a popular service, but it’s crucial to our day-to-day lives. Waste is unavoidable and that’s made the stock a great recession-proof investment to hold over years and probably even decades, just like utility stocks.
The company’s grown via acquisition and with strong free cash flow, it’ll continue to have opportunities to grow and expand into new markets. Last year was the second consecutive year where Waste Connections generated free cash flow of more than US$860 million. Its dividend is a much more modest yield of just 0.7% but it can still be important in helping add some important cash flow for your portfolio.
It’s a bit of an expensive buy, trading at close to 50 times earnings, but as investors look for safer investments to hold, its value may continue to rise.
Bottom line
When it comes to protecting your portfolio, it’s important to diversify and hold stocks that aren’t very volatile. Both these stocks have performed very well over the years, especially when compared against the TSX:
Adding a dividend on top of those returns makes these stocks even better buys today. Recession or not, these stocks always look to be good long-term investments.
