Market Uncertainty: 3 Stocks to Protect Your Portfolio From Losses

There’s a lot of uncertainty in the market right now. As a result, growth stocks are stumbling. Which three stocks could protect you from major downside?

| More on:
edit Safety First illustration

Image source: Getty Images

For most of 2021, the stock market has been surprisingly strong. However, a double whammy of uncertainty stemming from interest rates and the new COVID-19 Omicron variant has sent many stocks tumbling. With that in mind, what should investors be doing? Many institutional investors are selling stocks, as we can see from the falling broader market. In this article, I’ll discuss three stocks that could act as a hedge for your portfolio. These three stocks could provide great stability during these uncertain times.

A recession-proof company

When investors look for companies to provide stability to their portfolio, they often turn to one of the recession-proof industries. Generally, this is an industry that doesn’t experience any decreases in demand during times of economic uncertainty. For example, everyone will continue to rely on utility companies regardless of what the economic conditions look like. As a result, companies like Fortis (TSX:FTS)(NYSE:FTS) are viewed as being recession-proof.

This company provides regulated gas and electric utilities to more than 3.4 million customers across Canada, the United States, and the Caribbean. Fortis is a tremendous dividend company. In fact, at 47 years, Fortis’s dividend-growth streak is the second longest in Canada. Its forward dividend yield is also very attractive (3.82%).

Over the past month, the broader market has fallen over 3%. However, Fortis stock has remained steady. Barely holding onto a 0.4% gain over that period, this recession-proof company has helped portfolios stay ahead of the market over the past 30 days.

This industry is a Canadian favourite

Although not exactly a recession-proof industry, the Canadian banking industry features companies that Canadians should consider buying during these tough times. Because of the industry’s highly regulated nature, smaller competitors have a hard time displacing industry leaders. As a result, the banking industry features in many Canadian portfolios. Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is my top choice among the Big Five banks.

Over the past month, Bank of Nova Scotia has managed to fare even better than Fortis. Bank of Nova Scotia stock has gained 1.3% over the past 30 days. It’s also known that the banking industry tends to come out of downturns very strongly. This makes the stock even more attractive, as it could provide even more upside to investors as the market strengthens. This Canadian Dividend Aristocrat is a stock that you should consider adding to your portfolio today.

This stock is a lot more attractive than the business

When talking about recession-proof businesses, investors often also look at waste management companies. Regardless of what the economy looks like, humans will continue to produce waste, and someone will have to clean it up. As a result, companies like Waste Connections (TSX:WCN)(NYSE:WCN) should receive a lot of attention in the near future.

As its name suggests, Waste Connections provides waste collection, disposal, and recycling services in Canada and the United States. Year to date, Waste Connections stock has gained nearly 33%. Over the past month, it has gained nearly 3%. This outpaces the broader market by a decent margin. This may not be the most attractive business, but there’s no denying that Waste Connections could be a great stock to hold right 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 Jed Lloren owns shares of BANK OF NOVA SCOTIA. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »