Dividend studs and income aristocrats are selling at amazingly low prices. Great forever stocks like TD Bank, CN Rail, and Fortis are on sale with huge discounts. Passive income investors have some towering yields to pick and choose from.
Investors seeking growth stocks to buy and hold for years also have top-tier names like Canada Goose, Shopify, and Canopy Growth to snap up cheaply.
Young investors looking for great TSX stocks have some iconic Canadian businesses to pick from. The market crash is bringing untold consternation to many investors right now. However, contrarians and new investors have opportunities to salvage the entry points of a lifetime.
Two great TSX forever stocks
Dividend stocks are a great way to add low risk passive income to a Canadian investment portfolio. Blue-chip names like CN Rail and Fortis combine wide economic moats with defensive diversification. Fortis is a classic forever stock for the safety of utilities, a recession-proof asset class.
Meanwhile, CN Rail is strongly diversified across sectors, covering everything from consumer staples to oil in its supply network.
Fortis in particular has an outstanding track record of consecutive annual payments stretching back 45 years. Its dividend yield is currently 3.5%, and its share price is resilient. For instance, while the TSX Composite Index has lost % in the last three months, Fortis has lost only 4%.
CN Rail’s dividend yield is 2%, only marginally higher as we head into April. The classic forever stock derives roughly a quarter of its revenue from freight.
It also makes around 20% from petrochemicals, and 17% from agri goods. 13% of CN Rail’s revenue is sourced from forest products, while metals and mining makes up 12%. Auto industry and coal shipments make up 11%.
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A ten-point playbook for market crash investing
Make a wish list of top TSX names you would like to hold in a portfolio. Be prepared for a run of bad quarters, though. If they are dividend stocks, also be prepared for payments to be lowered or halted altogether.
Think about the entry point at which you would be most comfortable buying shares. Buy in smaller amounts of shares to will spread the depreciation risk while building positions with increasing outlay.
If you want to sell, trim on strength. Timing the TSX is impossible during periods of high volatility. However, short-term rallies offer opportunities to trim weaker names.
These are trying times, so be sure to balance risk in your portfolio. Mix those growth stocks with dividend-paying names, and be prepared to hold for years to come. Go long on the lowest-risk assets and mix in some high quality bonds.
The bottom line
A recession was already baked into the markets. Pundits and analysts alike have been eyeing a bear market for months. The combination of the current health crisis and the oil price war could mean that an economic depression is on the way.
But if you’re prepped for a downturn, the rules remain the same. New investors should trim the rallies and by the dips, in slow, measured increments of great TSX stocks.
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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Canada Goose Holdings, Canadian National Railway, Shopify, and Shopify. The Motley Fool recommends Canadian National Railway.