Retirees: Should You Sell in May and Go Away This Year?

Telus (TSX:T)(NYSE:TU) is a dividend stud that Canadian retirees should look to for the perfect mix of capital gains and dividend raises.

Retirees have been feeling the pain of the one-two punch hit by inflation and market turbulence. Indeed, stagflation seems inevitable at this juncture. This season’s round of earnings has been quite mixed. Worse, the outlook for some firms sounds pretty downbeat. As the big banks slowly increase the odds of recession, I think investors ought to play it safely with many defensive dividend stocks that can still provide shelter for investors.

Stagflationary fears mounting; bear market roars in the Nasdaq: Sell in May?

Ah, sell in May and go away: that’s the phrase we’ve heard almost every year, regardless of what the markets have been doing going up to the month. Such an arbitrary strategy makes no sense. And although it seems wise to take profits and flee the markets this time around, I’d argue that this May is the one you’ll want to stick around. Why? Remember that the best days tend to follow the worst days in markets. While they’re impossible to predict, you could be left out of the biggest bounce-back gains if you think you’ve got what it takes to get out now and get back in at the market’s bottom.

Timing the market is a foolish (lower-case f, folks) endeavour, especially for retirees amid inflationary times. Arguably, inflation is a worse beast than market volatility these days. With the prices of many high-quality stocks now marked down considerably, it may be time to give the many battered names out there a second look.

In this piece, we’ll do just that. We’ll have a closer look at two stocks that I believe are value names that are essentially hiding in plain sight.

So, with the TSX Index likely to crush the U.S. indices, please do consider the following home-grown names.

Telus

Telus (TSX: T)(NYSE: TU) is a dividend stud that was built for times like these. Slowing growth and higher inflation is an environment that Telus can fare well in versus your average discretionary play. The telecom titan may not have the highest dividend yield, but what it does have is the perfect mix of growth and passive income.

The stock is also looking quite cheap following the latest 7% slip off of its recent high. The stock trades at $32 and change per share. That puts the price-to-earnings multiple at 26.24. Now, that’s quite pricy from a historical perspective. But given all the market risks, I’d argue that the slightly higher multiple is worth paying. With a 4.1% dividend yield, investors would likely do far better over the next three years than if they just held cash. With inflation at 6.7% (and rising), Telus provides a risk-averse way to stay ahead in what could be a doozy of a year.

Enbridge

Enbridge (TSX: ENB)(NYSE: ENB) has a larger dividend yield, currently sitting at 6.2%. The pipeline giant may have enjoyed nice capital gains through the year, now up around 18% since the start of May 2021. Thanks to the energy industry tailwinds, I see Enbridge providing the perfect combo of capital gains and dividend hikes.

Indeed, Enbridge is one of few firms that continued to raise the bar on its payout through the coronavirus recession. As investors brace for another potentially longer-lived recession, Enbridge stock ought to be considered. Elevated energy prices are a major reason why pipelines like Enbridge may be immune from excessive downside this time around.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and TELUS CORPORATION.

More on Investing

A meter measures energy use.
Energy Stocks

Rates Are Rising Again: Is Emera Still a Sensible Retirement Stock?

Emera still offers retirement income, but borrowing costs and per-share earnings decide how comfortably that payment can grow.

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

How to Use a TFSA to Generate $200 in Monthly Tax-Free Income

Use a TFSA to build $200 in monthly tax-free income with XEI and ZRE. See how these ETFs work and…

Read more »

Business success of growth metaverse finance and investment profit graph concept or development analysis progress chart on financial market achievement strategy background with increase hand diagram
Dividend Stocks

Smart Ways to Invest Extra Income and Say Goodbye to Financial Stress

Canadians have ways to make their extra income work as hard as they do and say goodbye to financial stress.

Read more »

how to save money
Energy Stocks

How Much Would You Need to Invest in Enbridge to Average $200 a Month?

Enbridge’s current dividend needs roughly $42,600 in shares to average $200 monthly, with payments arriving every quarter.

Read more »

Two seniors walk in the forest
Dividend Stocks

Sun Life Stock Pays 3.3%: How Much to Invest for $100 a Month in Dividends

Sun Life Financial (TSX:SLF) might be a massive bargain after Thursday's vicious plunge as stock markets sold off hard.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn Your TFSA Into $1,000 a Month in Tax-Free Income

Build toward $1,000 a month in tax-free income with a TFSA. See how Enbridge, Scotiabank and ZWC could help, and…

Read more »

customer fills up car with gasoline
Dividend Stocks

How Much Emergency Money Do Canadians Actually Need?

A safety fund equivalent to 3 to 6 months of living expenses is generally the baseline buffer that Canadians would…

Read more »

Piggy bank in autumn leaves
Bank Stocks

Rates Are Rising Again, So Are GICs and High-Interest Savings ETFs Even Worth It?

The Bank of Canada hiked rates to 2.50%. See what a GIC or the Purpose savings ETF earns on $10,000…

Read more »