Do you like to go to adventure parks? Do travel and movement excite you? While all this is exciting, you can’t make it a routine. There comes a time when all you seek is silence and stability. There are times when you want boring days, do nothing, binge-watch a show from the nineties or read the same book for the thousandth time. It is these boring days that give you the strength to enjoy the excitement and adventure of volatility. Similar is the case with stocks.
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At times, it’s good to be boring
For a year, I only recommended buying or selling momentum stocks or the ones with growth and dividends. But your portfolio also needs resilient shares. They won’t give you growth nor high dividend yields. But they will give you one thing, and that is someone to fall back.
These are the businesses you take for granted, but they are a part of your everyday life. You can’t imagine life without them, and it is this sticky nature that makes them resilient. See for yourself.
Cascades stock
Are you out of toilet paper? Cascades (TSX: CAS) makes sure you never are. It makes packaging and tissue papers. The packaging materials are those corrugated boxes and paper packaging you see when you order food, furniture, wine, and consumer discretionary products.
Many thought the paper industry is dying with the digital revolution, and that is true. But the packaging industry is still growing with the advent of e-commerce and online food deliveries. As consumers become more aware of the hazards plastic packaging has on the environment, people and companies use paper as an alternative.
ResearchAndMarkets expects the global paper packaging market to grow at a compounded annual rate of around 4.5% during 2020-2026.
Cascades has stable fundamentals. Although its revenue growth rate is slowing, its profits and cash flows are rising. This is because the company is in the mature stage. The pandemic has increased packaging demand. The stock fell less than 10% during the March 2020 crash but rose 40% since then. Moreover, it pays a 2.1% dividend yield. The paper and packaging industry is in the mature stage. Even if Cascades becomes a target of acquisition like Domtar, shareholders will stand to benefit.
Canadian Tire stock
Canadian Tire (TSX: CTC.A), a retailer whose brick and mortar stores reach out to most Canadian households, took a stab in the pandemic. You must have visited a Canadian Tire store for the barbeque party you planned or to get the Christmas tree or for any discrete accessory for your house, car, or garden. What Canadian Tire missed out on was the e-commerce boom.
But the pandemic made the retailer catch up, and huge e-commerce volumes made it a perfect omnichannel Canadian retailer. The fact that the retailer is sticky assures you that the business is not dying. Probably it might continue to serve even in an apocalypse.
Canadian Tire stock won’t give you exciting growth like it did in the last year (127%) as it was in a recovery rally. But the stock will give you a 2.4% dividend yield.
Investor takeaway
You can invest a small portion of your portfolio, around 20-30%, in these boring stocks. They will help you fight inflation with their 2% dividend yield and reduce the downside of your overall portfolio.
