2 Stable TSX Stocks to Own in Unstable Markets

Add these two stable TSX stocks to your portfolio and hunker down for the bear market conditions this year.

| More on:
A bull and bear face off.

Source: Getty Images

Inflation has remained incredibly high this year, and central banks have enacted several steep interest rate hikes to control it. The Canadian equity market has been going through a bear market between rising interest rates, inflation, and other macroeconomic factors.

The S&P/TSX Composite Index is down by 12.4% from its 52-week high as of this writing. The Canadian benchmark index reflects how most of the stock market continues to decline this year.

While every investor might hope for some respite, it is unclear whether the market weakness will dissipate anytime soon and make way for a recovery. Fortunately, not all TSX stocks are having a bad year in 2022.

Today, I will discuss two solid stocks with solid underlying businesses you can add to your self-directed portfolio. Let’s look at both a business model resistant to broader economic conditions and one that benefits from rising living costs. These two TSX dividend stocks can be excellent investments in a bear market to add some stability to your portfolio.

Fortis

Fortis Inc. (TSX:FTS) is often considered a pillar of stability for Canadian stock market investors. The $25.54 billion market capitalization Canadian utility holdings company owns and operates several natural gas and electricity utility businesses across Canada, the US, Central America, and the Caribbean.

The company generates most of its revenue through highly rate-regulated and long-term contracted assets. This revenue stability creates predictable and reliable cash flows. Fortis offers an essential service, allowing the company to earn money regardless of broader economic environments.

2022 has seen Fortis stock’s share price performance decline. Regulated utility companies have a solid business model that generates predictable revenue. However, they also rely on a debt-heavy approach. Rising interest rates have impacted its short-term performance, but its declining share prices can be a good thing.

As of this writing, the Canadian Dividend Aristocrat trades for an 11.8% year-to-date discount at $53.35 per share. Its discounted share prices have inflated its payouts of a juicy 4.24% dividend yield. The business is stable. All considered, rising interest rates have only made it a more attractive investment to consider for stability and reliable dividend income.

Dollarama

Dollarama Inc. (TSX:DOL) is a business that thrives when broader markets decline. The $22.8 billion market capitalization dollar store is the largest of its kind in Canada. Operating over 1,400 locations in Canada and with a growing presence in Latin America through a subsidiary, the company has plenty of avenues to generate cash flows.

With rising living costs, consumers want to cut down expenses, making businesses like Dollarama the go-to resource for many people.

By offering goods at lower costs, more shoppers are choosing Dollarama to get their essentials while keeping their expenses down. The stock’s popularity is reflected in its share price performance this year. As of this writing, Dollarama stock trades for $79.41 per share, up by 25.2% year to date. A drastic contrast from the rest of the Canadian stock market.

Offering quarterly payouts at a meager 0.28% dividend yield, it can be an excellent addition to your portfolio during volatile market environments.

Foolish takeaway

Well-capitalized and with resilient business models, the TSX boasts several publicly traded companies that have managed to outperform the rest of the market. Identifying and investing in high-quality companies well-suited to harsh economic environments can be an astute way to preserve your investment capital.

Once you add that degree of stability to your portfolio, you can consider making riskier investments with high return potential with capital you have available to invest. Fortis stock offers stability in bear markets, while Dollarama stock delivers stellar growth. These two TSX stocks can be excellent assets to buy and hold during any market environment.

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 FORTIS INC. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

REITs with modest amounts of debt, like Killam Apartment REIT (TSX:KMP.UN), can be good investments.

Read more »

Technology
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Some of the smartest buys investors can make with $500 today are stocks that have upside potential and pay you…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend Stocks to Buy in April for Safe Passive Income

These TSX Dividend stocks offer more than 5% yield and are reliable bets to generate worry-free passive income.

Read more »

protect, safe, trust
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $1,000

If you've only got $1,000 on hand, that's fine! Here is how to make a top-notch, passive-income portfolio that could…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

CPP Insights: The Average Benefit at Age 60 in 2024

The average CPP benefit at age 60 in average is low, but claiming early has many advantages with the right…

Read more »

thinking
Dividend Stocks

Why Did goeasy Stock Jump 6% This Week?

The spring budget came in from our federal government, and goeasy stock (TSX:GSY) investors were incredibly pleased by the results.

Read more »

woman analyze data
Dividend Stocks

My Top 5 Dividend Stocks for Passive-Income Investors to Buy in April 2024

These five TSX dividend stocks can help you create a passive stream of dividend income for life. Let's see why.

Read more »

investment research
Dividend Stocks

5 Easy Ways to Make Extra Money in Canada

These easy methods can help Canadians make money in 2024, and keep it growing throughout the years to come.

Read more »