News of an impending stock market crash is a familiar but worrisome refrain these days. Although the TSX is displaying resiliency, investors are on their toes. COVID-19 remains the most significant threat that if the pandemic lingers, the prognosis is that economic recovery will take longer.
Apprehension is growing among investors when billionaires are staying away from the market and keeping their cash. Likewise, fund managers keep warning of another free fall. If you don’t want to derail your long-term financial goals, you can cut to the chase. Invest smart and pick “buy-and-hold” stocks.
If there is turmoil on the horizon, Fortis (TSX:FTS)(NYSE:FTS) is the go-to stock of risk-averse investors. This utility stock is the TSX’s all-time great when it comes to an eternal defensive position in a long-term income portfolio. You need a stock with bond-like features when market volatility is at its highest.
Fortis is not among the top dividend-payers, but the 3.49% dividend it pays today is safe and secure. I also have to mention the impressive long-term track record of this $25.42 billion electric and gas utility company. It spans almost 50 years. Despite the relatively low yield, you will benefit from the power of compounding.
Aside from the safe and reliable payouts, you have an instant hedge against inflation. Expect dividend growth in the coming years as income steadily grows. In terms of stock performance, Fortis is up 3.03% year-to-date. The stock is not fully exempt from correction, but it will not swing wildly as other riskier equities.
Telecom giant BCE (TSX:BCE)(NYSE:BCE) is another gem for investors seeking capital protection and a steady income stream for life. If electricity and gas are essentials in the pandemic and beyond, so are telecommunication services and the Internet.
BCE has been operating since 1855 and chiefly responsible for building the communications infrastructure in Canada. About 99% of the country’s population has access to BCE’s LTE network. The recent launch of the 5G network will further cement the dominant position of this $52 billion company.
In terms of income potential, this telco stock pays a 5.78% dividend. A $50,000 position and 25-year holding period will push the investment’s value to $203,731.92. The perpetual monthly income is $240.83. A would-be investor will have a financial buffer in periods of downturn or recession.
As Canada begins the arduous task of economic recovery, BCE will ensure the country remains at the forefront of 5G innovation and accessibility. Analysts forecast a price appreciation of 19% (from $57.98 to $69) in the next 12 months. Add the dividends, and BCE can potentially deliver market-beating returns.
Holding for eternity
Reading the market behaviour is not easy in 2020. You see stocks advancing while the economies are declining. Because of this discrepancy or disconnect, analysts are sure of a forthcoming correction. Other factors fueling the anxiety are rising unemployment, deterioration of U.S.-China relations, and the re-election bid of Donald Trump.
You can insulate yourself from the noise and prepare for the eventuality by holding Fortis or BCE in your investment portfolio. Either way, you won’t be selling the utility stock or telco stock at all.
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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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.