Not every investor has the risk tolerance to chase high-growth, speculative stocks, and that’s okay. Much like the old story of the tortoise and the hare, sometimes slow and steady does win the race in investing. Growing your portfolio long-term means avoiding the big drops and downside volatility.
While investors can temper portfolio volatility with holdings in bonds or cash, they can also alter their stock selection and pick sectors or companies with lower volatility. These companies may grow more slowly during bull markets, but they can also fall less during bear markets.
That is, by buying these stocks, investors could help their portfolio achieve lower highs, but also higher lows. If a smoother sequence of returns helps you sleep better at night and avoid panic-selling, I think it could be worth it. Let’s check out two of my top picks today.
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George Weston Limited
George Weston Limited (TSX: WN) is a leading Canadian company operating in the consumer staples sector, with a focus on food processing and distribution. Overall, the consumer staples sector has defensive characteristics thanks to its evergreen demand.
What’s more important though is George Weston’s historically low five-year monthly beta of 0.38, a measure of volatility and sensitivity relative to the broad market. On average, George Weston has fluctuated much less than the market. Remember, the market always has a beta of one.
Investors will also be pleased to note that George Weston pays a modest dividend, coming in at a forward annual yield of 1.6%. While this seems small, it’s important to note how sustainable it is. As of present, George Weston has a very reasonable dividend payout ratio of 21.2%.
Intact Financial Corporation
Intact Financial Corporation (TSX: IFC) is a prominent player in the Canadian financial services sector, specializing in property and casualty insurance. The stock has taken about a 4.9% haircut over the last month due to contagion from the U.S. regional bank crisis, but is otherwise sitting intact (pun intended).
If you’re looking to diversify your portfolio away from the Big 6 TSX Bank stocks, then Intact Financial Corporation could be a great addition. The stock might not yield as much with a forward annual dividend yield of 2.11%, but like George Weston it has a great sustainable payout ratio of 29.7%.
Intact Financial Corporation is also one of the few TSX financial sector stocks with a decently low beta. Currently, the five-year monthly beta of this stock sits at 0.56, making it just slightly more than half as volatile as the overall market, and less volatile than most financial sector stocks.
