Market Correction: 3 Defensive Stocks to Buy in December

Canadians worried about a market correction should snag defensive stocks like Hydro One Ltd. (TSX:H) and others before 2022.

| More on:
Cogs turning against each other

Image source: Getty Images.

The last severe market correction occurred in February and March 2020. Markets plunged, as the severity of the COVID-19 pandemic became apparent. Since then, North American markets have thrived in the face of historically low interest rates, radical social spending, and continued quantitative easing. Canada has already dramatically scaled back on the latter two developments. The Bank of Canada (BoC) is now telegraphing rate hikes in 2022. Investors worried about a potential market correction should look to snatch up defensive stocks in the final month of the year. Let’s jump in.

Grocery retailers can provide cover in another market correction

Inflation has soared to near 20-year highs in Canada this year. Food price increases have been one of the key drivers, along with rising gasoline prices. Grocery retailers like Metro (TSX:MRU) are solid defensive stocks to target in this climate. Shares of Metro have climbed 8.6% in 2021 as of close on November 25. The stock has dropped 2.3% week over week.

The company released its fourth-quarter and full-year 2021 results on November 17. Adjusted net earnings rose 3.9% to $200 million. Meanwhile, sales have increased 1.6% from the full year in 2020 and 9% from 2019. Moreover, adjusted net earnings also jumped 3% to $854 million in 2021.

This defensive stock possesses a favourable price-to-earnings (P/E) ratio of 18. It offers a quarterly dividend of $0.25 per share, which represents a modest 1.6% yield.

Here’s a telecom that is worthy of being called a defensive stock

BCE (TSX:BCE)(NYSE:BCE) is a Montreal-based telecommunications company. Shares of this defensive stock have climbed 18% in the year-to-date period. Telecom is one of the most dependable sectors in Canada. These are stocks that you can trust in the event of a market correction.

In Q3 2021, the company delivered adjusted net earnings growth of 5.1% to $748 million, or $0.82 on a per-share basis. Meanwhile, it posted 266,919 total wireless mobile phone and mobile connected device, retail Internet, and IPTV net subscriber activations — up 10% from the previous year. BCE closed out the quarter with strong liquidity of $6.1 billion.

Shares of this defensive stock last had an attractive P/E ratio of 19. BCE pays out a quarterly dividend of $0.875 per share, which represents a strong 5.3% yield.

One more top defensive stock to hold in the event of a market correction

Hydro One (TSX:H) boasts a monopoly on electricity transmission and distribution in Ontario, the most populous province in Canada. Last year, I’d discussed why Hydro One was a defensive stock you could trust for the long haul. This utility can provide protection in a market correction.

Shares of Hydro One have climbed 6.9% in 2021 as of close on November 25. In Q3 2021, the company delivered earnings per share of $0.50 — up from $0.47 per share in the previous year. Meanwhile, adjusted net income was reported at $806 million, or $1.34 per share, in the year-to-date period — up from $742 million, or $1.24 per share, in 2020.

This defensive stock has a favourable P/E ratio of 19. Moreover, it offers a quarterly dividend of $0.266 per share. This represents a 3.4% yield.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

sale discount best price
Investing

Buy the Dip: 2 Strong TSX Stocks That Recently Went on Sale!

Consider buying Parkland Fuel (TSX:PKI) stock and another top dividend play on their recent corrections.

Read more »

A worker uses a double monitor computer screen in an office.
Dividend Stocks

TFSA Investors: 2 Winning Buy-and-Hold Forever Stocks in April 2024

Buy-and-hold stocks are easy enough to find if you limit yourself to dividends, but there are at least a few…

Read more »

worry concern
Dividend Stocks

Telus Stock Is Down to its Pandemic Low of Below $22: How Low Can it Go?

Telus stock is down 37% in two years and is trading near its pandemic low, making investors wonder how low…

Read more »

edit Businessman using calculator next to laptop
Energy Stocks

If You’d Invested $5,000 in Brookfield Renewable Partners Stock in 2023, This Is How Much You Would Have Today

Here's how a $5,000 lump-sum investment in BEP.UN would have worked out from 2023 to present.

Read more »

money cash dividends
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

After adding these three TSX dividend stocks to your portfolio, you can expect to receive attractive monthly income for years…

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

edit Person using calculator next to charts and graphs
Stocks for Beginners

Where to Invest $7,000 in April 2024

Are you wondering how to deploy the $7,000 TFSA contribution increase in 2024? Here are four high-quality stocks for earning…

Read more »

Technology
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »