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3 of the Best TSX Stocks to Buy When Markets Are at Record Highs

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The S&P/TSX Composite Index recorded yet another record high, breaching $19,400 levels yesterday. TSX stocks at large have added more than 45% since the epic crash last year.

However, although markets look strong and could continue to soar higher, it is advisable that conservative investors should increase their exposure to defensive stocks. Those stocks will provide stability and create a passive-income stream if markets turn weak from here. Here are three top Canadian names that could stand strong in volatile markets.

TC Energy

One of the biggest energy pipeline companies, TC Energy (TSX:TRP)(NYSE:TRP), is one of the best dividend stocks in Canada. It currently yields nearly 6% — way higher than that of the broader market average. TC Energy has increased dividends for the last 21 consecutive years. Notably, its low-cost, fixed-fee operations facilitate earnings stability and visibility, which allows consistently growing dividends.

TC Energy stock yields lower than its bigger peer Enbridge. However, investors should note that TRP stock has returned 11% compounded annually in the last five years, significantly outperforming ENB.

TC Energy aims to increase dividends by around 6% annually for the next few years. Its strong balance sheet, dividend visibility, and decent growth prospects make it a strong investment for long-term investors.

Fortis

Not all stocks can weather the crisis. Top utility stock Fortis (TSX:FTS)(NYSE:FTS) has seen multiple crises in the past and emerged stronger after each one. Be it the 2008 financial crisis or the pandemic crash last year, Fortis maintained its dividend increase streak and rewarded shareholders.

Notably, FTS stock was not immune to the decline during the crash last year. However, it managed to recover relatively faster and outperformed broader markets eventually.

Fortis yields 3.7%, which is in line with TSX stocks at large. Despite its average yield, Fortis offers long-term portfolio stability and decent total return potential.

If you invest $100 in FTS stock, you will get $3.7 per share in dividends every year. Also, the dividend amount will increase as the company’s earnings grow.

Utilities are classic defensives mainly due to their recession-resilient operations. They generally earn stable revenues even in recessions, which makes their dividends reliable. That’s why investors turn to utilities amid volatile markets.

BCE

Like utilities, telecoms are also stable stocks and act as solid defensives. Consider Canada’s top telecom company stock BCE (TSX:BCE)(NYSE:BCE). It makes sense to bet on the telecom stocks now ahead of the 5G revolution. The new tech will open significant growth opportunities for global telecom companies.

BCE is well placed to benefit from the 5G revolution, considering its large subscriber base and strong balance sheet. The industry consolidation and aggressive investments in capital projects will likely bode well for BCE. It will likely see accelerated earnings growth in the next few years, which should unlock value for long-term investors.

BCE has increased dividends for the last several years and yields 6% at the moment. Its juicy yield and decent gain prospects make it one of the top TSX stocks to buy today.

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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 Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FORTIS INC.

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