Even though the market is hot, considering the current climate, it’s understandable if investors have some concerns. Whether you’re worried about a recession or pullback in the economy, you want to make sure your stocks aren’t impacted.
There are many reasons to have concerns about the economy. Another wave of the pandemic is coming, and it’s still uncertain how long the virus will continue to affect us.
Furthermore, many households and businesses are still hurting from the initial impacts of the pandemic.
Another issue you may be concerned about is how the economy will respond when the Bank of Canada finally raises interest rates. As interest rates are increased, what kind of effect will it have on debt and new spending?
So if you’re worried about a recession or slowdown in the economy, here are five stocks that are highly robust, making them ideal to own in this environment.
Utility stocks are ideal to own ahead of recessions
Some of the safest businesses you can own are utility stocks. So if you’re worried about a recession, I’d look to buy some of these highly robust stocks. Not only do they offer services that the customers need, but it’s also a highly regulated industry.
Plus, these stocks tend to all be dividend growth stocks with extremely low volatility in the share price. This makes them the ideal stocks to buy if you’re looking to protect your money.
One of Canada’s most popular utility stocks is Fortis, which has raised its dividend for 47 consecutive years now.
Another highly defensive industry to consider is green energy, a subsector of utilities.
These stocks offer nearly as much defence as utility stocks and, of course, some significant long-term growth potential. Often you can find a stock that offers both, such as Algonquin Power and Utilities.
Algonquin is a great stock if you’re looking to protect your capital as it’s highly defensive. However, because a third of its business comes from its green energy segment, it has some significant long-term growth potential.
In addition to power generation and utilities, consumer staples is certainly another sector to find the best stocks to buy ahead of a recession.
Staples imply that they are the main goods consumers need to buy. This mainly includes essential items like household products and food.
And since these items are essential, consumers need to buy them regardless of their income level. That’s why consumer staples like Loblaw are some of the best businesses to buy if you’re worried about a recession. They will see little impact on sales, making operations a lot more resilient and the investment considerably safe.
Another industry to find stocks in if you’re worried about a recession is telecommunications. A stock like BCE (TSX:BCE)(NYSE:BCE), with its well-diversified operations, is a highly resilient company to own.
In this day, having access to telecommunications is almost as important as having access to electricity, water, and heat.
So telecom stocks like BCE are another great business to own, and because they are consistently growing, they make incredible long-term investments.
Today 5G technology offers some of the top long-term potential for the sector. However, the main reason to invest in BCE is its robust operations.
And because it owns long-life assets, the stock is a massive cash cow. This allows it to consistently increase its dividend while simultaneously investing in more long-term growth. So if you’re worried about a recession, BCE is a top stock to buy now.
Real estate is resilient in recessions
Finally, an industry like real estate can also be quite robust. Obviously, the unprecedented nature of the pandemic showed that retail real estate has its risks too.
But residential real estate, for example, is always a defensive industry to invest in. Just as consumers need heat and electricity, they, of course, need shelter.
So residential real estate is always a top industry to invest in, especially since high-quality stocks like InterRent REIT offer exposure to an incredible portfolio of residential real estate assets.
So if you’re worried about a recession and want to ensure your portfolio is robust, these stocks are some of the best to buy now.
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 Daniel Da Costa owns shares of ALGONQUIN POWER AND UTILITIES CORP., BCE INC., and INTERRENT REAL ESTATE INVESTMENT TRUST. The Motley Fool recommends FORTIS INC.