The stock market isn’t for the faint of heart. There will be times when your portfolio is soaring and gains are very easy to come by. Other times, it’ll feel like your portfolio is headed towards a bottomless pit. These feelings are further amplified the more aggressive your approach to investing becomes. However, there are some companies you can consider adding to your portfolio to help balance things out. These companies provide much needed stability while giving reasonable returns. Here are three reliable stocks.
Few companies on the TSX can match these returns
Since 2007, very few companies have been able to match the performance of Constellation Software (TSX:CSU). For those that are unfamiliar, Constellation Software in an acquirer of vertical market software (VMS) businesses. To date, the company has completed hundreds of acquisitions over its two-and-a-half-decade history. Earlier this year, Constellation Software president and founder Mark Leonard announced that the company would finally consider acquiring large VMS businesses. This could be a major growth catalyst moving forward.
Constellation Software stock has managed to gain more than 8,500% since 2007. This outstanding return gives the stock an average annual return of about 39%. Over the same period, the TSX has produced an average annual return of nearly 3%. There’s no doubt holding Constellation Software over the past decade and a half would have been one of the best financial decisions you could have made. Even more impressive, Constellation Software has produced those returns with a beta of 0.75. This means the stock is less volatile than the broader market.
One of the oldest companies in Canada
With nearly 33,000 km of track, Canadian National Railway (TSX:CNR)(NYSE:CNI) is the operator of the largest rail network in Canada. An older company, Canadian National was founded over 100 years ago. Since then, the company has managed to become a solid fixture among Canadians. Anyone that lives in Canada should be very familiar with Canadian National. That kind of brand awareness is something investors should take note of. Bill Gates is one of the biggest believers of Canadian National’s potential, holding more than $1.5 billion of stock.
Since its IPO, Canadian National stock has gained more than 4,500%. This represents an average annual return of 17%. Much like Constellation Software, that makes Canadian National a major outperformer compared to the broader market. Over the same period, the TSX has gained about 5% annually. Currently, Canadian National stock has a beta of 0.63. This indicates that the stock is much less volatile than Constellation Software and the broader market.
This recession-proof stock is a winner
Dividend stocks are known to be less volatile than growth-minded companies. Fortis (TSX:FTS)(NYSE:FTS) brings this to another level. Currently, its beta is a mind-blowing 0.05. This is almost as low as any company can be rated, indicating its stock is significantly less volatile than the broader market. Since August 1995, Fortis stock has gained about 2,300%. This represents an average annual return of about 13%. Over the same period, the TSX has returned about 5%.
Fortis is an international provider of regulated gas and electric utilities. It serves more than three million customers in Canada, the United States, and the Caribbean. Perhaps the most amazing aspect of this company is its incredible dividend-growth streak. At 47 years of continued dividend growth, the stock is a bona fide Dividend Aristocrat. This streak also gives the company the second-longest active dividend-growth streak in Canada. There’s no reason to think it won’t be able to continue that streak moving forward.
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.
The Motley Fool owns shares of and recommends Constellation Software. The Motley Fool recommends Canadian National Railway and FORTIS INC.