Scared of the Stock Market? This 1 Stock Should Calm You Down

A lot of people find it difficult to trust their money to the ever-changing stock market and prefer to stick to safer but low-return alternatives.

| More on:
Watch for the Warning Signs Stock Market Prices Trends 3d Illustration

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Once upon a time, before the internet came and sped everything up, people used to take things slowly. They took their time in relationships, jobs, businesses, and investments. People assumed that most investments take a lot of time to mature and become profitable. The perception changed with day trading, but relatively few people had access to it in the past.

Now, with millions of retail investors with trading apps on their phones and volatile assets like crypto becoming commonplace, the assumed pace of investment growth has changed. But this rapid activity and volatility are still beyond the appetite of many people. And the negative consequence of this low-risk tolerance is that they tend to stay away from the stock market altogether, relying on bonds and other fixed-income vehicles to grow their savings at a snail’s pace.

If you are scared of the stock market and believe these angry waters are not for you, there is one calm “lake” you might be interested in.

A stable utility stock

Many people who don’t like to invest in stocks believe that stocks are inherently risky and unreliable. But this perception can change if you start looking into stable stocks like Fortis (TSX:FTS)(NYSE:FTS). It’s a utility company with 3.4 million customers (2.1 million electric and 1.3 million natural gas customers). 99% of the company’s assets are regulated.

As a leader in regulated electricity and gas electricity in North America, Fortis is quite well positioned in the utility industry. And even though it’s paltry compared to its presence in the U.S. and Canada, Fortis has utility operations in eight Caribbean countries as well.

The company has been serving North Americans since 1885 and has about $56 billion worth of assets to its name. And it’s not just stable today. Fortis is rapidly evolving to meet the new realities (and expectations) of a “greener” utility market of tomorrow.

The dividends and capital growth

Understanding how financially stable and sound the company is important to dispel your fears of investing in the stock market. But knowing the return potential is crucial as well. Fortis has the distinction of being the second-oldest aristocrat on the TSX and has been growing its payouts for 47 consecutive years. It’s quite close to achieving the dividend king status in the U.S., which only a handful of corporations possess.

The stellar dividend history comes with a decent enough yield (3.68%). Fortis also has capital growth potential if we consider its history. Apart from some usual dips, the stock price has been growing relatively consistently for the last three decades. And its 10-year compound annual growth rate (CAGR) of 9.4%, though not very impressive, is sustainable and is significantly better for growing your wealth than fixed-income alternatives.

Foolish takeaway

The major strength of a stock like Fortis is that it tends to fare well even in harsh market conditions. That doesn’t mean it doesn’t go down when the market crashes or keep growing even during a recession. But compared to the broader market, Fortis performs comparatively well, thanks to its reliable revenue sources and the investor confidence it commands.

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 FORTIS INC.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

The 3 Best Dividend Stocks for Monthly Passive Income

These three dividend stocks are the best options for those seeking high passive income in the next few years in…

Read more »

clock time
Dividend Stocks

Got $10,000 to Invest? 1 Cheap TSX Stock to Buy Right Now

This top TSX dividend stock is finally on sale and has made some savvy buy-and-hold investors quite rich.

Read more »

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

Want Monthly Passive Income? These TSX Dividend Stocks Are for You

If you want monthly passive income from TSX stocks, you have to do a little digging. I've given you a…

Read more »

ETF chart stocks
Dividend Stocks

3 International ETFs to Buy for a Diversified Portfolio

Some international markets may prove more resilient against economic downturns, and exposure to them may strengthen your portfolio during crashes…

Read more »

Payday ringed on a calendar
Dividend Stocks

TFSA Pension: 3 Canadian Dividend Stocks to Buy for Monthly Passive Income

These high-yield Canadian stocks look good to buy right now for a TFSA focused on monthly passive income.

Read more »

TIMER SAYING TIME FOR ACTION
Dividend Stocks

Need $500 Right Away? These 3 Passive-Income Stocks Have Got You Covered

I could really use an extra $500 to feed my kids, who seem to be permanently hungry. Couldn't you?

Read more »

Young adult woman walking up the stairs with sun sport background
Dividend Stocks

3 Top TSX Stocks to Begin Your Investment Journey

Given their solid business models and stable cash flows, these three TSX stocks are ideal for income-seeking investors.

Read more »

Community homes
Dividend Stocks

Housing Market Crash: How to Make a Profit 

The housing market crash is here, but you can still earn dividends with Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP).

Read more »