Investing Insomnia? 2 TSX Stocks That Let You Sleep at Night

These utility stocks provide a great combination of lower volatility and higher yields.

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I don’t like using the term “safe stock,” because there’s really no such thing. Compared to other asset classes like bonds and cash, stocks tend to be much more volatile. Even the most solid of blue-chip companies can experience sharp share price declines during a market crash.

That being said, some stock market sectors have historically been less sensitive to the market’s gyrations and less volatile than peers in other sectors. A great example is the TSX utility sector, which benefits from strong regulations and steady demand.

If market volatility is keeping you up at night, then you may want to consider my two TSX utility stock picks for today. Historically, both of these stocks have been much less up and down than, say, stocks from the TSX technology sector, like Shopify.


The top TSX utility stock on many investor’s radar is Fortis (TSX:FTS). This large-cap stock currently sits at around $26 billion in market cap. Now, we can talk all day about how Fortis has consistently paid dividends for decades or its historical outperformance versus the TSX, but that’s not today’s focus.

What is worth noting is the low beta that Fortis currently has. Right now, the stock has a five-year monthly beta of 0.17. This metric measures how much a stock has historically moved relative to the market, which has a beta of one. The beta therefore tells us about the systematic risk possessed by a stock.

The low 0.17 beta possessed by Fortis means that historically, Fortis has fluctuated much less than the market has. On average, if the overall TSX surges, Fortis is expected to surge less. However, if the TSX falls, Fortis is likely to fall less. That’s not bad for a stock with a 4.23% forward dividend yield.


Now, investing just in Fortis carries idiosyncratic risk — that is, the risk that Fortis performs poorly. While Fortis is an example of a long-standing company with historically excellent management, there’s always the possibility of something going wrong in the future.

To protect against this, we can pick another low-beta stock from the same sector Fortis is in, which is utilities. A possible pick here is Emera (TSX:EMA), which has a smaller market cap of $14.5 billion, and a slightly higher beta of 0.27, which is still considered low. Emera currently pays a forward yield of 5.18%.

However, its important to note that both stocks carry industry-specific risks. A sharp blow to the utility sector from things like regulation and rising interest rates could deal a sharp blow. To mitigate this, consider dividend stocks from other TSX sectors (and the Fool has some great ideas below!)

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 Tony Dong has no position in any of the stocks mentioned. The Motley Fool recommends Emera and Fortis. The Motley Fool has a disclosure policy.

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