3 TSX Stocks I'll Hold Even in a Market Correction

3 TSX Stocks I’ll Hold Even in a Market Correction

These three TSX stocks are set up to create passive income for my long-term portfolio, with all but assured growth for years to come.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 15, 2022 1:30 pm EDT

It can be a really hard time to decide what to do with your investments during a market correction. Motley Fool investors first were “treated” to a market correction between Mar. 29 and mid-May. The TSX fell by 10.8%, and it hasn’t done much better since.

In fact, after recovering 6.77% between mid-May and the beginning of June, shares are back down by almost 5% as of writing. That’s back to the correction territory we saw back around May 12. And it’s leaving Motley Fool investors with no idea what to do on the TSX today.

But let me be clear. Markets go down, but they do come back up. Not all stocks will recover. But these three TSX stocks are ones I’ll never get rid of, even during a market correction.

CIBC

The Big Six banks are some of the best places to put cash during a market correction. These companies have provisions for loan losses, which has allowed them to return to pre-crash norms within a year. Even during major recessions.

And let’s be honest, a recession could potentially be on the way if things continue in this way for TSX stocks. That makes now a great time to invest in a bank like Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM). I invest in a few banks, but I like CIBC on the TSX today because of its dividend. It will provide me with passive income that will support my portfolio while I wait for a recovery.

Shares of CIBC are down 11% year to date, trading at 9.31 times earnings and offering a dividend of 4.93%.

Brookfield Renewable

I like setting my TSX stocks up for the future, and that’s why I’ve been moving away from oil and gas and towards renewable energy. Brookfield Renewable Partners (TSX: BEP.UN)(NYSE: BEP) is one of my favourites because of this. It has a diversified range of clean energy assets around the world, providing me with diversification.

However, it also provides me with the massive opportunity of growth in the renewable sector over the next few decades. So, not only would I leave my shares alone in a market correction, but I’d buy some up — especially as it also offers passive income that will support my portfolio on the TSX today.

Shares of Brookfield Renewable are down 2% year to date and 15% since March, offering a dividend of 3.5%.

ZWC

Finally, I want to also keep my portfolio safe, and that means looking at TSX stocks in the exchange-traded fund category. I want high dividends with stable growth that will see me through market corrections and even recessions for the future, which is why I like BMO Canadian High Dividend Covered Call ETF (TSX: ZWC).

ZWC ETF focuses on creating a high dividend, with stable returns supported by covered calls. In the case of ZWC, it offers a dividend yield of 6.41% as of writing. That passive income comes out every single month, providing me with not just stable but regular payments in my portfolio.

Shares of ZWC ETF are down 3% on the TSX today year to date.

Foolish takeaway

Motley Fool investors may want to sell everything right now as we go into protection mode. But that is not how you protect your portfolio. If you truly want to see your investments come out the other side on the TSX today, you want to choose strong, long-term options like these. In my case, I’ll be holding onto these TSX stocks for as long as I can.