At the end of August, the S&P/TSX Composite index was trading above 16,800.
Fast forward to today, and the S&P/TSX Composite index is trading at 16,185, as of this writing.
If you’re concerned that this is the start of another market crash, here is one stock to consider.
What caused the market to crash this week?
While many hoped that the COVID-19 pandemic would be a short-lived crisis, the coronavirus seems to have lingering effects on the economy.
Not only are the travel and airline industries suffering, but the pandemic is still creating disruption for other industries as well. These include restaurants, gyms, movie chains, and other small businesses. The pandemic will derail the revenues of these types of businesses for the foreseeable future. No one knows when these businesses will be able to operate at full capacity or when the public will feel safe returning to pre-pandemic activities.
Grim forecast from banks
Both Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM) and Royal Bank of Canada (TSX: RY)(NYSE: RY) released their quarterly reports within the past few weeks. Both banks provided a grim forecast for the Canadian economy.
RBC forecasted that “weak business and consumer confidence is expected to keep GDP well-below year-ago levels by the end of the calendar year.” Likewise, this dismal outlook was echoed by CIBC.
Shares of RBC are trading at $96.41, as of this writing. Although the stock is trading above its March lows, the stock is down over 12% from its 52-week high.
As of this writing, CIBC stock is trading at $102.30, down from a high of $115.96 over the past year.
CIBC saw its profits tumble in the third quarter, as it increased its funds set aside for bad debts. The mortgage deferrals for customers affected by the pandemic will begin to expire in the next few months. This could impact losses if people begin to default on their loans.
Emera
One sector to consider if you are concerned about a repeat of the stock market crash, like we witnessed in March, is utilities. Typically, utilities offer protection during turbulent markets.
Trading at $54.16 as of this writing, Emera (TSX: EMA) is down just over 2% since the beginning of the year.
This energy leader, with approximately $34 billion in assets and 2.5 million utility customers in multiple countries, has proven to have consistent earnings over the years. Even during the COVID-19 pandemic, Emera proved to be a great investment.
Emera has also been reliable in paying out dividends. The company has boosted its dividend payments by over 50% in the past five years. At the current stock price, Emera’s dividend is 4.46%. Management has suggested that investors can expect between 4% and 5% dividend growth for at least the next two years.
The bottom line
Emera is a great company for long-term investors. The stock has been one of the most reliable stocks on the TSX. The share price of Emera has held up well during the recent market crash and should continue this trend going forward, despite any turbulence in the market.
With a current dividend yield of almost 4.5% and a conservative payout ratio, shareholders can appreciate secure reliable income for years to come.
