2 Safe Stocks to Buy if You’re Scared of a Market Pullback

The TSX is standing on shaky ground in November 2021, but investors fearing a downturn can look to two resilient and safe stocks.

| More on:
edit Safety First illustration

Image source: Getty Images

The rebound of the S&P/TSX Composite Index in October 2021 represents its biggest monthly gain since November 2020. However, as we usher in a new November, the market is vulnerable to a correction. Rising inflation and supply chain disruptions are imminent threats to stability.

Investors are on guard for a possible severe downturn that hasn’t happened since the selloff in March 2020. Thus, it makes perfect sense to rebalance your portfolio if a pullback scares you. Fortis (TSX:FTS)(NYSE:FTS) will undoubtedly be top of mind again in the utility sector.

Meanwhile, Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is another go-to stock, whether as a back-up to Fortis or a standalone core holding. Both companies can endure economic meltdowns, given the critical nature of their businesses.

First-rate defensive asset

Fortis’s defensive qualities stem from its Dividend Aristocrat status. Its dividend-growth streak of 48 consecutive years is a compelling reason to own this stock in good and bad times. Moreover, this $25.95 billion electric and gas utility company derives nearly 100% revenues from highly regulated assets.

You can purchase a Fortis share at $55.09 today to partake of its 3.88% dividend. For illustration purposes, a $50,000 investment would produce $1,940 in dividends. Since the payout is four times a year, you’d have a recurring quarterly income of $485. You can keep reinvesting dividends and not touch the principal for the power of compounding.

The best part about Fortis is that it requires minimal monitoring or none at all. It’s the kind of asset you purchase today and forget. You can cope with inflation, and the dividend is your financial cushion should the price decline. Regardless of the economic environment, your income streams will keep coming.

On September 29, 2021, the board of directors approved an increase in dividends. For would-be investors, this most recent increase is consistent with management’s plan to increase the payouts by 6% annually through 2025. Thus, besides capital protection and safety of dividends, there’ll be consistent income growth for decades.

Equally resilient

Brookfield Infrastructure is the flagship infrastructure company of Brookfield Asset Management. This $21.53 billion company owns and operates utilities, transport, midstream, and data businesses. The latest development is its completed acquisition of Inter Pipeline, which includes its crown jewel: the Heartland Petrochemical Complex.

On the stock market, BIP.UN’s performance is steady with its 19% year-to-date gain. At $72.86 per share, the dividend yield is 3.55%. Brookfield Infrastructure may not be a fast dividend grower, but it has low economic sensitivity and is equally resilient as Fortis.

Brookfield’s infrastructure operations generate stable cash flows and boast high margins internal growth projects. It has the size and financial capacity to pursue acquisition opportunities to meet the global economy’s ever-growing need for infrastructure.

In the first half of 2021, the company reported a net income of US$542 million — an 834% year-over-year growth. Its CEO Sam Pollock said, “We are well positioned to sustain our momentum into the second half of the year as market conditions are favourable for our business.” For prospective investors, expect Brookfield Infrastructure to continue with its successful record of acquisitions.

Solid investments

Fortis and Brookfield Infrastructure Partners are solid investments that you can hold for years. The businesses can endure a financial meltdown, while the dividend payments should be rock solid. Lastly, you’re buying peace of mind.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV, Brookfield Infra Partners LP Units, Brookfield Infrastructure Partners, and FORTIS INC.

More on Dividend Stocks

Growth from coins
Dividend Stocks

1 Dividend-Growth Stock to Buy and Hold for the Next 15 Years

CN Rail (TSX:CNR) is a dividend-growth giant worth buying on weakness in July.

Read more »

analyze data
Dividend Stocks

The 5.11% Dividend Stock Set to Dominate the TSX

Brookfield Infrastructure (TSX:BIP.UN) has already been dominating the TSX, but more is certainly on the way.

Read more »

sale discount best price
Dividend Stocks

3 Remarkably Cheap TSX Stocks to Buy Right Now

Investing in undervalued TSX stocks such as Eldorado Gold should help Canadians derive steady gains in 2024 and beyond.

Read more »

Canadian Dollars
Dividend Stocks

2 Magnificent Ultra-High-Yield Dividend Stocks That Are Screaming Buys in July

These two top Canadian dividend stocks offer over 8% annualized dividend yield in July, making them really attractive to buy…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

1 TSX Stock That Could Help Set You Up for Life

Early investors in Intact Financial (TSX:IFC) stock could earn a 17% dividend yield in 2024. Here's how IFC stock could…

Read more »

Increasing yield
Dividend Stocks

3 High-Yield Stocks for Canadian Retirees

These Canadian dividend stocks can help retirees to earn steady passive income and high yields.

Read more »

dividends grow over time
Dividend Stocks

Just How Sustainable Is the Smashing 9% Yield of These 2 Stocks?

Sustainable high yields are rare, so when they occur, it's usually a good idea to take advantage.

Read more »

Woman has an idea
Dividend Stocks

TC Energy Stock: Buy, Sell, or Hold?

TC Energy is up nearly 30% from the 12-month low. Are more gains on the way?

Read more »