The market craziness that we saw during February and March has officially extended into April. Following the disastrous crash in March, the market now seems to be gearing towards a rally.
I say “seems” because if there’s one thing that we’ve seen over the past months, it’s that we are living in a time of extreme volatility. That craziness also means there are some uniquely discounted stocks to buy at the moment.
So how exactly should investors account for that volatility in their portfolio? Defensive stocks are always a great path forward, particularly those stocks that offer a handsome dividend.
Here are two such stocks to consider adding to your portfolio today.
Buy green, get rich
Canada’s Big Banks are some of the best investments on the market. Toronto-Dominion Bank (TSX: TD)(NYSE: TD) is a long-time favourite among investors, and for good reason.
TD is the second-largest bank in Canada and one of the largest banks in the U.S. market. TD’s quiet ascension to become one of the largest banks in the U.S. is something that prospective investors should strongly take into consideration.
In short, Canadian banks are well known for being highly regulated. Specifically, that regulatory overhead makes them more stable than their U.S. peers. Factor in a growing presence in the lucrative U.S. market where loan and deposit growth exceed Canada and you have a winning stock to buy.
So how exactly did TD enter the U.S. market with such force?
Following the Great Recession, TD acquired several regional banks along the U.S. east coast and stitched them together under a single brand: TD Bank. Today, TD has a network of over 1,200 branches in the U.S. stretching from Maine to Florida.
Interestingly, that U.S. branch network is provided steady gains during earnings season, now accounting for a whopping 38% of net income as of the most recent quarter.
In terms of a dividend, TD offers investors a quarterly dividend that works out to an appetizing 5.80% yield.
Your cell is important to your portfolio
Wireless devices are the one thing that has kept many of us occupied and sane during this period of self-isolation, so it only seems fitting that I now mention a telecom.
While Shaw Communications (TSX:SJR)(NYSE: SJR) is neither the largest nor the most well-known of Canada’s telecoms, that doesn’t mean that the Calgary-based company isn’t a great stock to buy.
Year to date, Shaw has seen its stock price drop by 20%, which is hardly a compelling reason to consider an investment. So what exactly makes Shaw a solid investment option?
Enter Freedom Mobile, Shaw’s wireless segment. Compared to the Big Three telecoms, Freedom mobile is still a new player on the field. That smaller size means that Freedom’s coverage is restricted to just some of Canada’s major metro areas.
Shaw is actively working on expanding that coverage, but an expected competitive coverage growth still a few years out. To offset the lack of coverage, Shaw is offering very compelling rates and data allowances in areas where it does provide coverage.
As Shaw continues to report subscriber growth, those efforts appear to be working. By example, in the most recent quarter, Shaw reported a gain of 54,000 postpaid subscribers. That gain was instrumental in Shaw’s wireless segment seeing a whopping 18% year-over-year improvement to adjusted EBITDA.
In terms of a dividend, Shaw offers a monthly distribution that currently works out to a handsome 5.39% yield. Investors should note that Shaw’s dividend is not subject to the same annual hikes that some of its telecom peers offer. Rather, Shaw is actively reinvesting into building out Freedom mobile’s coverage further.
Are these good stocks to buy?
Both TD Bank and Shaw represent stellar options to add to any portfolio. Additionally, both stocks are still trading at levels far below where they started in 2020.
Despite that initial appeal, we’re still in a period of extreme volatility. While the volatility is a concern, the long-term prospects for both stocks make them solid options to buy now and hold for decades.
