3 Top Stocks to Buy in the Next Market Crash

Another market crash could be on the way. Which stocks deserve to be on your radar if market crash 2.0 arrives in the coming weeks or months?

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background

Image source: Getty Images

Analysts fear rising coronavirus cases in major economies around the world could force new lockdowns and trigger a second market crash.

Investors who missed the opportunity to buy oversold stocks earlier this year might get another chance to add some of the best stocks on the TSX Index to their portfolios at cheap prices.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) began 2020 at $73 per share. The stock dipped below $47 in March and rebounded as high as $61 in early June. At the time of writing, the shares trade close to $55 and offer a 6.5% dividend yield.

Bank of Nova Scotia’s large international operations focused on Mexico, Peru, Colombia, and Chile make the stock more vulnerable to the near-term global economic shocks and a second market crash caused by the pandemic. However, the Pacific Alliance countries also hold strong growth potential in the coming decades.

Bank of Nova Scotia’s other divisions continues to generate solid profits and the bank has the capital to ride out the downturn. The dividend should be safe and the stock now trades at less than 10 times anticipated earnings. This is cheap compared to the other large Canadian banks.

Any move back toward the $50 point should be viewed as an opportunity to back up the truck.

BCE

BCE (TSX:BCE)(NYSE:BCE) is Canada largest communications firm. The business operates world-class wireless and wireline networks across the country. A shift to home offices will remain permanent for many people. The result should be growth in demand for higher-end internet packages to cover expanded broadband needs.

On the mobile side, the arrival of 5G provides BCE with strong potential for revenue growth. Added connectivity leads to higher data use and extra security concerns. BCE’s security and monitoring services can be bundled with mobile, internet, and TV subscriptions.

Canada’s new $10 billion infrastructure program includes funds to extend high-speed internet services to rural and remote communities. BCE is positioned well to benefit from the initiative.

The stock trades near $55 and provides a 6% dividend yield. BCE began 2020 at $60 and moved as high as $65 before the pandemic, so there is already decent upside potential. Look to buy on further downside.

Is Fortis stock a good market crash hedge?

Fortis (TSX:FTS)(NYSE:FTS) is a North American utility company with businesses located in Canada, the United States, and the Caribbean. Operations include natural gas distribution, power generation, and electricity transmission.

Fortis gets most of its revenue from regulated assets, which means cash flow tends to be reliable and predictable regardless of the state of the economy. The board raised the dividend in each of the past 46 years and intends to hike the payout by 6% per year through 2024.

The stock trades close to where it began the year, indicating the stability of the shares despite the March market crash and the negative impact of the pandemic. In the event the stock market tanks again and Fortis shares sell off, investors should take advantage of the dip.

market crash hedge - Fortis

Otherwise, Fortis is a solid pick to use as a defensive investment through the current uncertain times. Investors get a decent 3.7% yield with strong dividend growth on the horizon.

The bottom line on investing in a market crash

A stock market crash always provides buy-and-hold investors with a rare opportunity to buy great companies at cheap prices.

Being greedy when the rest of the world is fearful takes guts. However, top investors such as Warren Buffett became billionaires by following this philosophy.

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.

The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC. Fool contributor Andrew Walker owns shares of BCE and Fortis.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »