The TSX Composite Index continues to trade at all-time highs. While this alone doesn’t mean a market crash is coming, it does mean there could potentially be at least a pull back. Whether or not that happens, a market crash will eventually come. While it may not be in the next few months, a market crash can happen amid any normal market.
That means it’s great to prepare well ahead of any potential market crash. To do so, you need a mix of companies that provide a strong future outlook.
One of the best places you can invest is with Canada’s Big Six Banks. While it’s true that banks tend to drop quite a bit during a market crash, banks are also filled with professionals that get revenue and thus shares back to pre-crash levels quickly. Look at the last recession of 2008 as an example. Canada’s banks fared as some of the best in the world, getting back to pre-crash levels within a year. That’s happened again since the crash in March 2020.
If you’re considering any bank for safety, then Royal Bank of Canada (TSX:RY)(NYSE:RY) is a perfect option. It’s the largest bank by market capitalization, and expanding rapidly. It has a huge presence in the United States, but is expanding into the wealth and commercial management sector, which has proven highly lucrative in Canada. It has also expanded into emerging markets, which will provide a diverse portfolio that limits dips in revenue.
Shares are up 4.71% in the last year, but 84% in the last five years for a CAGR of 12.92%. It also provides a solid dividend of 4.05% as of writing.
If you want a safe stock that will limit your exposure to any market crash, that’s definitely those in the utilities sector. These stocks see revenue come in no matter what the market does, as it’s an essential service for every industry and every person on the planet.
That’s what makes Fortis Inc. (TSX:FTS)(NYSE:FTS) so strong. The company has been growing through acquisition for years now, buying up projects across North America. Its predictable cash flow means it can continue growing its already strong dividend. In fact, it’s just one year shy of becoming a Dividend King at 49 years of increased dividend payments! And the company continues to expect a CAGR of 7.2% in the next few years.
As for the last few years, the last year has shares still down by 7% from pre-crash highs, but in the last five years shares are up 49.75% with a CAGR of 8.4%. It also provides that solid dividend of 3.92% as of writing.
Finally, if you want a company with a strong future outlook but are fine with not as much history, look to telehealth stocks. WELL Health Technologies Corp (TSX:WELL) in particular has soared in the last year or so, in part because of the pandemic. Telehealth has become a necessity during COVID-19, but will very likely continue to be a necessity for the foreseeable future.
It looks like WELL Health will lead that charge. The company recently announced a major acquisition that will see it expand into the U.S. market by buying CRH Medical for $295.5 million. The company expects to increase revenue per share by 120%, and EBITDA by 800% in 2021 alone.
Shares are up 371% in the last year, and $2,305% in the last three years. Now while that growth isn’t sustainable for the long run, you can certainly see how these shares will continue to soar for at least the next few years, and remain strong for decades.
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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 Amy Legate-Wolfe owns shares of ROYAL BANK OF CANADA. The Motley Fool recommends FORTIS INC.