Defensive Investors: 3 Stocks to Shore Up Your Portfolio

These defensive dividend stocks that are trading at good valuations are perfect for conservative investors to buy now.

| More on:
edit Safe pig, protect money

Image source: Getty Images

Stocks are generally riskier than bonds. However, within the realm of stocks, some are more defensive than others. Here are three blue-chip stocks that can shore up your portfolio to make it more defensive in terms of lower volatility and improved returns stability from their safe dividends.

RBC stock

Royal Bank of Canada (TSX:RY) is a global systematically important bank. Over the years, it has grown to offer a range of financial services, including personal and commercial banking, wealth management services, insurance, corporate banking, and capital market services. Its core business is in Canada, and it also has meaningful operations in the United States.

As a leading bank in Canada with strong operating efficiency and a leading position in its offerings, it enjoys a wide moat on its business. You’ll notice that the RBC stock price tends to be resilient versus the industry during downturns. Here’s a one-year stock price comparison between the bank stock and a banking exchange-traded fund (ETF) as an example.

RY Chart

RY and ZEB data by YCharts

At roughly $130 per share at writing, RBC stock is fairly valued. It also offers a dividend yield of just over 4% that helps provide predictable returns for your diversified portfolio. You can expect this dividend to rise over time.

TELUS stock

The big Canadian telecoms are generally defensive stocks. Right now, in particular, TELUS (TSX:T) stock offers two extra layers of defence. First, it tops the revenue growth of its peers. Revenue growth often leads to earnings growth as long as the company keeps its costs in check. Second, TELUS stock is the cheapest among its peers for its growth potential.

For example, from 2019 to 2021, TELUS increased its revenue by 15.4%, while raising its gross profits by 19%. Its S&P credit rating did drop from BBB+ to BBB recently. Though still an investment-grade credit rating, its cost of capital is set to raise. This is partly why the stock has taken a beating recently.

At about $27 per share at writing, analysts believe the telecom stock is undervalued by about 18%. It also offers a safe dividend yield of 5.2%. Investors can look forward to the telecom to increase its dividend two times a year for a total hike of at least 7% annually through 2025.

Brookfield Renewable Partners stock

If you’re as excited as the management of this company in the multi-decade growth trend for renewable power, you’ll want to take a position in Brookfield Renewable Partners (TSX:BEP.UN) stock. It’s a global renewable power platform that owns, operates, and invests across different technologies, including hydro, wind, solar, and power storage facilities in North America, South America, Europe, and Asia.

The dividend stock just had a meaningful selloff, falling approximately 18% in the last 12 months. Rising interest rates are one reason for the correction, providing an opportunity for long-term investors to buy the dip. This valuation provides a margin of safety to protect your principal. Analysts believe the dividend stock is undervalued by about 33%.

At about $35 per unit at writing, it offers a cash-distribution yield of almost 4.9%. Moreover, BEP intends to increase its cash distribution by at least 5% per year.

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 Kay Ng has positions in Brookfield Renewable Partners and TELUS. The Motley Fool recommends Brookfield Renewable Partners and TELUS. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

Are you looking for dividends each and every month? This stock is the right "choice" for you, providing stable passive…

Read more »

Dividend Stocks

Dividend Investors: Top Canadian Utility Stocks For June

Here are three of the top Canadian utilities stocks long-term investors may want to consider as portfolio staples moving forward.

Read more »

data analyze research
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Two stocks paying monthly dividends are excellent options for income-focused investors looking to increase their passive-income streams.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Invest $7,000 in This Dividend Stock for $519 in Passive Income

A $7,000 investment in this top dividend stock could generate over $519 annually in passive income.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Stocks Ready for Dividend Hikes in 2024

These three stocks are not only primed to increase their dividends again this year; they are three of the best…

Read more »

Dividend Stocks

Add These 6 Undervalued Stocks to Your TFSA Before Prices Pick Back Up

These six undervalued stocks are perfect for those seeking massive passive income for your TFSA, and prices are about to…

Read more »

Golden crown on a red velvet background
Dividend Stocks

The Dividend Kings: Stocks Every Canadian Investor Should Own

Dividend Kings have the status for a reason. They're stable, growing companies that will provide dividends to investors for decades.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye On

Income investors may want to keep an eye on two high-yielding stocks but should be conscious about the inherent business…

Read more »