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.
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.