Many new investors likely found out that they overestimated their ability to take investment risk last year. Undoubtedly, it took a vicious tech sell-off to show many market newcomers the value of sticking with the boring, proven companies. Yet, these companies have what it takes to hold up when interest rates rise and the chilly breeze of recession moves in.
Blue-chip dividend growers are great names to have at the core of any TFSA or RRSP fund. They may not be exciting or great value opportunities at any given time. However, they can help investors build wealth over extended durations of time.
Of course, no stock is immune to the ups and downs that come with markets. However, at least with the blue chips, investors know that they can still recoup losses after a sell-off has worked its course. Indeed, even after a severe bear market, the blue chips can find their footing again to hit new heights. The same cannot be said for the tech-driven growth darlings that many of us flocked to in 2020 and 2021.
New investors who got caught up in the hype can’t be blamed for having a bit of FOMO (fear of missing out). It’s hard to just stand pat when others around you are making big gains off speculative assets and momentum stocks. If you simply said no to FOMO and stood with your boring blue chips, you’d probably be fine, even beating the market after one of the worst years in quite a while.
Blue chips with histories of delivering market-beating performance are even better names to consider when the tides of recession move in.
Currently, Restaurant Brands International (TSX:QSR) and Brookfield Corp. (TSX:BN) are worth consideration.
Restaurant Brands International
Restaurant Brands has been a laggard for years now. Recently, QSR stock has been one of the hotter names on the TSX, surging nearly 50% since bottoming out last June. At $90 and change, the stock has new highs (just north of $100) in sight. Given the durability of fast-food brands like Burger King, Popeye’s Louisiana Kitchen, and Tim Hortons, I don’t think a downturn can stop the stock from its surge.
Indeed, the November spike caused by the hiring of industry legend Patrick Doyle has caused many to re-evaluate QSR. It’s a company that’s on the right track after losing its way for many years. With a 21.9 times trailing price-to-earnings multiple and a 3.3% dividend yield, I’m inclined to name QSR as one of my top picks for the rest of the year.
Brookfield Corp.
Brookfield Corp. is the result of a spin-off that saw the asset management business become its own publicly-traded entity. The parent Brookfield still has a big stake at 75% in the asset management business. By buying Brookfield Corp. alone, you’re getting less exposure to asset management, but the long-term fundamentals and values of Brookfield haven’t changed too much.
The firm is still behind some terrific alternative assets that can help investors sail through turbulent times. The stock trades at 0.6 times sales and 17.8 times trailing price-to-earnings. That’s a pretty modest multiple.
