3 Top TSX Stocks Experts Recommend Ahead of a Recession

These three TSX stocks can provide protection should Canadians enter a recession in 2023, and the reasons are clear.

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A recession still isn’t 100% guaranteed in Canada. While the United States looks like it will enter one — and, sure, that would affect our country — we could escape a recession. Furthermore, even if we enter one, many economists project a mild recession. Because of this, investors should still be considering opportunities from TSX stocks.

And there are strong opportunities out there. In fact, there are strong opportunities you should consider even if we do enter a full-blown recession. So, let’s take that tactic today. If we do enter one, these are the three TSX stocks I would want in my portfolio today.

Canadian Utilities stock

Canadian Utilities (TSX:CU) is the only Dividend King on the TSX today. That’s over 50 consecutive years of dividend growth to add into your portfolio. And right now, with the market the way it is, you can lock in that dividend yield at 5.11%, which is pretty unheard of in the case of this stock.

Besides a high yield, you can also seek some value by picking up this dividend stock right now. It’s one of the TSX stocks in the utilities sector, which continued to climb through most of 2022. However, that took a turn recently, as recession fears increased.

Now, shares may be down from 52-week highs, but they remain stable. Investors can therefore lock in this stock while it trades at 16.02 times earnings. And, remember, it’s still a utility stock! Therefore, it offers long-term contracts with cash continuously flowing in.

Fortis stock

Another of these TSX stocks to consider in the utilities sector is Fortis (TSX:FTS). While Fortis may not be a Dividend King, it’s awfully close and remains just shy of 50 years. It will certainly become the next on the Canadian market, so you can look forward to even more consecutive years of dividend growth.

It’s a TSX stock that offers stability through utilities. The company continues to grow both organically and through acquisitions, spreading its businesses throughout North America and Latin America. And with long-term agreements made again and again, investors are certain to see their cash flowing in for another few decades at least. And right now, you can lock in a dividend at 4.3%.

Fortis stock also saw shares climb in 2022, but then those shares fell back with worries over a recession. Sure, shares are down 11.5% year to date. But think long term. Over time, Fortis stock has grown 126% in the last decade. And that growth hasn’t been crazy; it’s been steady. That’s what investors want from their investments.

Brookfield Infrastructure stock

There’s another commonality between all three of these TSX stocks. Each falls into the infrastructure sector. Infrastructure provides us with everyday essentials that we constantly use. Whether it’s having a shower, making a coffee, or driving to work, you need infrastructure to do those things.

That’s why the last of the TSX stocks I’d recommend ahead of a recession is Brookfield Infrastructure Partners (TSX:BIP.UN). This company is involved with utilities as well as gas, water, hydro, and more. It has assets around the world, providing you with a diversified set of income that you can look forward to for decades.

Brookfield offers stable income with its dividend yield of 4.04%. Furthermore, shares are down about 2.5% year to date. That’s nothing crazy, but it offers you some protection these days. Even still, over the last decade, shares have increased by 460%!

Bottom line

If you want security from your TSX stocks, then I would look at infrastructure stocks like these. All three of these companies offer protection should we enter a recession. And even if we don’t, they’ll certainly offer you stable income for decades.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infra Partners LP Units and FORTIS INC. The Motley Fool has a disclosure policy.

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