If there was one word to define what the market has been like so far in 2022, it would be volatile. Between the global supply crunch, rising oil prices, the ongoing pandemic, and the war in Ukraine, there are many forces impacting the market. That volatility has some investors contemplating a prolonged pullback, a recession, or what to do if the stock market crashes.
Fortunately, we’re not there, but if that were to happen, it would expose significant opportunities for long-term investors. By way of example, here are two stocks I own that I’ll buy more of if the stock market crashes.
Stock #1: Enbridge
Enbridge (TSX: ENB)(NYSE: ENB) is a stock that most investors are aware of. The energy infrastructure behemoth has its hands in multiple segments. This not only includes its lucrative pipeline business, but it’s also a growing renewable energy provider. Additionally, Enbridge is also one of the largest natural gas utilities on the continent.
So, why will I buy more of Enbridge if the stock market crashes? That comes down to three key reasons.
First, Enbridge runs a very defensive business. The company’s pipeline business transports nearly a third of all North American produced crude. Even better, that pipeline business generates a recurring revenue stream that is independent of the price of oil. It’s not a coincidence that Enbridge’s pipeline business is often compared with a toll-road network.
Second, let’s talk about renewable energy. Over the past two decades, Enbridge has invested over $8 billion in developing its renewable energy network. Today, that portfolio consists of over 45 facilities that include wind, solar, geothermal, and hydro facilities located around the world. Collectively, those facilities generate a net 2,178 MW of power, which is enough to power over 960,000 homes.
To say that segment is going to continue to grow in importance irrespective of the market would be an understatement.
Finally, there’s Enbridge’s dividend. The company boasts a quarterly dividend that has one of the best yields on the market. Currently, that yield works out to 6.21%, meaning that a $40,000 investment will earn just shy of $2,500.
Investors looking for long-term gains can opt to reinvest that income until needed, driving your income up even further.
Stock #2: Canadian National Railway
Railway stocks are some of the most defensive options on the market. There’s a good reason for that, too. Railroads haul massive amounts of freight each day, connecting warehouses, factories, and ports to communities across the entire continent.
Canadian National Railway (TSX: CNR)(NYSE: CNI) is the largest railroad in Canada and one of the largest on the continent. In fact, CN is the only railroad that has direct access to three coastlines in North America. That competitive advantage is huge and is just one reason why I will buy more of the stock if the stock market crashes.
The amount of freight that CN hauls is huge. The railroad hauls over $250 billion worth of goods each year. Those goods can be anything from automotive components and chemicals to wheat, raw materials, crude oil, or finished products.
That diversification is another key advantage that few investors realize. This allows CN to throttle up or down specific types of freight based on demand. And because of that massive network, the railroad is always connected to where those goods need to go.
Speaking of that network, there’s another important point to note. Railroad networks were established and built over the course of decades. Today, those networks are mature with entire communities established around them. For any competitor to emerge today as a challenger to CN’s network would require decades of construction and tens of billions in costs.
In other words, that network is secure and very defensive.
Finally, let’s talk dividends. Canadian National pays out a juicy quarterly dividend. The 1.78% yield may not be as high as Enbridge’s, but it is consistent, secure, and growing. In fact, factoring in growth, the rate is significantly higher and in double-digit territory.
Final thoughts
No investment is without risk. Fortunately, both Enbridge and Canadian National are great buy-and-forget candidates for any well-diversified portfolio.
Buy them, hold them, and watch your portfolio grow, even if the stock market crashes.
