The Canadian benchmark index, the S&P/TSX Composite Index, was trading in the red between August 11 and August 19, 2021, after reaching a new all-time high on August 11. It seemed that after a long time of hitting new highs, we might finally be entering a bear market. At writing, the index is back up by 1.30% in the few days, and it seems set on sustaining an upward trajectory again.
While it remains to be seen whether we’re going to see a significant market downturn in the coming weeks, the rising volatility is increasing concerns among investors who are worried about their investments in the stock market.
Turning tail and running away from the stock market with all your money might not be the wisest move if you’re worried about protecting your capital. There is a far better way to strengthen your investment portfolio.
I will discuss two safe Canadian stocks that you should have on your radar today if you’re looking for low-risk businesses that can continue generating stable cash flows during harsh operating environments to protect your money.
Fortis (TSX:FTS)(NYSE:FTS) relies on regulated utility assets to generate almost its entire income. The utility holding company owns and operates several utility businesses that can generate stable cash flows for the company regardless of the operating environment due to the essential nature of its services. With operations in Canada, the U.S., and the Caribbean, Fortis also enjoys significant geographic diversity.
The safe Canadian dividend stock is among the best dividend payers in Canada. The Canadian Dividend Aristocrat has been rewarding its shareholders with dividend hikes each year for the last 47 years. The predictable cash flows its utility operations generate allow the company to fund its rising dividends comfortably.
Additionally, its management plans to raise its dividends at a CAGR of 6% in the next five years, as it expands its rate base through its five-year capital plan.
At writing, the stock is trading for $58.05 per share and boasts a juicy 3.48% dividend yield that you can lock into your portfolio today.
BCE (TSX:BCE)(NYSE:BCE) is one of the publicly traded companies on the TSX that can provide you with significant protection for your wealth during volatile market conditions. The world has become increasingly digital, and the pandemic hastened the pace of digitization worldwide.
The advent of 5G technology will become a major growth driver for telecom operators, and BCE is one of the companies leading the charge in the 5G space in Canada.
The company has increased its capital spending to expand its 5G infrastructure and plans to provide 5G services to 70% of Canadians by the end of this year. Besides its upside potential through its growing 5G infrastructure, the company generates significant income through its growing customer base for various wireline and wireless services. BCE added over 115,000 new customers in the last four quarters.
At writing, the stock is trading for $65.95 per share, and it boasts a juicy 5.39% dividend yield supported by robust cash flows.
Low-risk businesses that can continue to generate stable cash flows and are least impacted by economic cycles might not be the most exciting companies to own during bull market conditions due to their slower movement on the stock market. However, these are exactly the businesses that can protect your investment capital and help you continue generating returns from your investments during volatile market conditions.
If you’re worried about market volatility and want to prepare your portfolio for the next bear market, it would be a good idea to consider strengthening your portfolio through investments in assets like Fortis stock and BCE stock.
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.