Recession Fears: 3 Stocks to Stash Your Cash in

While gold is considered a safe bet during the recession, there are plenty of businesses that might be considered equally healthy alternatives.

| More on:
data analyze research

Image source: Getty Images

With the possibility of another full-scale market crash within two years of the last one, and the recession reaching historically high levels, the fear of a recession is rising. But the situation is not nearly as dire as it was in 2008, and there are several strong elements (in the economy) balancing those fears.

Unemployment hasn’t been this low in years, and the relevant departments are taking strong, decisive measures to arrest the inflation and the dangerously bubbly housing market.

But even a “gentle” recession is still a recession, and you may want to adjust your portfolio to weather it better. There are several ways to do that, ranging from investing in gold stocks to parking your cash in safe industry leaders. And the latter might prove to be a better long-term holding.

A telecom leader

Telus (TSX:T)(NYSE:TU) is one of the three telecom giants in Canada and the best, most consistent grower. Currently, it’s also offering a juicy 4.7% yield, but the stock’s long-term growth potential, or at least how it’s manifesting since 2009, attracts more investors to this telecom giant. It’s also evolving as a significant 5G player in the Canadian market by investing heavily in the requisite infrastructure.

The telecom market in Canada is quite saturated. All three companies have carved out different pieces of the market for themselves, especially in the significant overlapping domains like wireless and broadband. This is one of the reasons why Telus is pursuing growth in secondary markets, like the acquisition of LifeWorks and its strong home security front.

However, most organic growth is expected to come from 5G, especially if we start seeing some serious traction within the overlap of 5G and IoT.

A power-generation company

Electricity is an evergreen and reasonably recession-resistant business because no matter the economic condition, people still need power as a basic necessity and are willing to pay for it. This makes companies like Capital Power (TSX:CPX) an intelligent investment to curb your fear of the recession. This Edmonton-based company has been around for over 130 years; it is deeply rooted in the communities it serves.

Capital Power is a bit different from many newcomers in this arena, as it still generates a sizeable portion of its power using conventional sources like coal. However, it’s aiming to be off coal by 2024. It’s also investing heavily in renewable sources for power generation.

The company is evolving into a greener version of its former self, and even though the reliance on coal and other fossil fuels may be keeping the ESG numbers of the company down, it hasn’t affected its stock. The stock has mostly gone up since Dec. 2015 and has grown roughly 170% since then. It’s also offering a juicy 4.8% yield to go along with that growth potential.

A renewable energy company

Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is an excellent holding for a recession or market crash. Not only is it in the electric utility business, but it’s also future-facing and focuses only on renewables.

The portfolio of assets is quite geographically diversified, and since the recession is rarely uniform, the company may fare better (financially) than its peers with geographically concentrated portfolios.

The historical performance of the company has also been quite encouraging. It was a steady grower up until 2018. Then it experienced expedited growth and is currently going through a correction phase, which has pushed the company’s value down 28% so far. This also had a positive side effect: a 3.6% yield.

Foolish takeaway

All three companies have the resilience and market presence to absorb the damning impact of market crashes and recessions while experiencing healthy long-term growth. If you can buy low and stick with them long enough, you might enhance the already attractive return potential by a significant margin.  

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »