TFSA Investors: 2 Safe Stocks to Buy if You Predict Market Volatility in 2021

In 2020, we saw the market crash, and despite speculation that the market would crash another time, it didn’t happen. So, the speculation about 2021 is strong.

| More on:
Volatile market, stock volatility

Image source: Getty Images

The year 2020 was a financial mess. The economy got weaker and weaker, the job market suffered, and the stock market crashed. While some sectors recovered quite rapidly, some are still struggling. As a whole, the market is back to its pre-pandemic levels, but the underlying economy is still weak and still propped up (partially) on stimulus payments.

A lot of people are taking it as an indication that a market crash might come in 2021. If you are one of them, you might consider preparing accordingly. You would have learned a lot about your portfolio’s weak and strong points in 2020, and if you anticipate another market crash, you can shift some things around to make your portfolio more resilient.

Another thing you might consider doing is adding a few safe stocks to your portfolio.

A specialty packaging company

Being invested in the world’s largest label maker is not much of a brag, but it’s a definite competitive advantage. CCL Industries (TSX:CCL.B) was established in 1951 in Toronto, Canada, as a custom manufacturing industry. It has now grown into a $10.66 billion industrial giant with 183 production facilities in 42 countries and employs 22,000 people.

The company seems like a safe bet when you look into its finances as well. It has a strong balance sheet, and revenue has been growing year over year for the past 10 years. It has a strong long-term growth history, with a 10-year CAGR of 26% (though the last five years have been relatively slow). The company is also a long-standing Dividend Aristocrat with almost two decades of dividend growth under its belt, but the 1.17% yield is not very alluring.

A specialty food manufacturing company

Premium Brands Holdings (TSX:PBH) is another Aristocrat that has grown its dividends for eight consecutive years. 2020 was a rough year for the food industry, especially restaurants, but since PBH focuses more on packaged food and distribution, it fared relatively well. The stock reclaimed its pre-pandemic peak within the year. While it’s not an industry leader across the board, it has some competitive advantages.

The company claims about 50% of the packaged sandwich market in the country. It also has a diversified product/distribution portfolio and multiple revenue streams. It’s currently offering a yield of 2.24%, and the 10-year CAGR of the company comes out to about 26.7%. It might be a safe long-term bet.

Foolish takeaway

These two aren’t the only safe stocks you can look into, but it would be best if they are on your radar if you believe a market crash is coming and you want to prepare your portfolio accordingly. Since they are both Dividend Aristocrats as well, you can be reasonably certain of your dividend income from these stocks, even if the valuation takes time to jump back.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Carnival and CCL INDUSTRIES INC., CL. B, NV.

More on Dividend Stocks

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Stocks to Hold for a Reliable Source of Passive Income

Are you looking for a way to produce a reliable source of passive income? Hold these three stocks!

Read more »

worry concern
Dividend Stocks

3 Stocks to Buy if You Are Worried About a Recession

There are a lot of safe investments that can help your portfolio remain afloat during a recession and the market…

Read more »

Two colleagues working on new global financial strategy plan using tablet and laptop.
Dividend Stocks

2 Canadian Dividend Stocks I Just Bought During the Selloff 

There are plenty of high-quality investments to consider today, but these two Canadian dividend stocks are easily among the best.

Read more »

Dividend Stocks

Top 3 Utility Stocks for Stability and Consistent Income

These utility stocks could continue to return cash, irrespective of the volatility in the market.

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Tradeoff: Lower Home Prices for Higher Debt Burden

Buyers welcome lower home prices but more rate hikes will increase their financial burdens.

Read more »

Dividend Stocks

1 Top REIT to Buy Amid Housing Price Cooldown

Consider investing in this Canadian REIT if you want to capitalize on the housing price cooldown right now.

Read more »

stock analysis
Dividend Stocks

TFSA Passive Income: 2 Oversold Dividend Stocks for Self-Directed Investors

These top TSX dividend stocks look cheap right now.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Under-$20 Dividend Stocks to Boost Your Passive Income

Given their stable cash flows and high dividend yields, these three under-$20 Canadian stocks can boost your passive income.

Read more »