3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the headwinds.

Today’s rocky market could extend due to the banking turmoil in the U.S. and a potential interest rate hike in April 2023. Even though the inflation reading went down to 5.2% in the last month, the governing council of the Bank of Canada thinks it will take more to bring it down significantly.

If you’re looking for anchors in your portfolio, choose stocks suitable for the current environment. Fortis (TSX: FTS) is the go-to stock of risk-averse investors, while Constellation Software (TSX: CSU) and Payfare Inc. (TSX: PAY) defy the headwinds.

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Hail the new king!

Fortis boasts 49 years of consecutive dividend increases and will likely be crowned a dividend king in 2023. More good news is on the horizon, given management’s 4% to 6% annual dividend growth guidance for 2027. At $55.41 per share (-3.32%), you can partake in the super-safe 3.93% dividend.

The $26.7 billion company oversees 10 affiliated electric and gas operations in Canada, the United States, and the Caribbean. Eight of the operations are regulated, low-risk, and diversified. Fortis President and CEO David Hutchens said, “2022 was a year of execution with strong financial, operational and sustainability results across our utilities.

According to Hutchens, Fortis will focus on organic growth, and the $22.3 billion capital plan represents steady rate base growth of 6%. It should also drive earnings that support management’s dividend growth guidance. Fortis will likewise have the flexibility to fund more capital projects with internally-generated funds.

Large-cap growth stock

Constellation Software is a large-cap, growth stock. This tech stock trades at $2,352.57 (+11.3% year to date) and pays a modest 0.23% dividend. The $50.4 billion company acquires, manages, and builds industry-specific software businesses. It caters to clients in the public and private sectors.

Constellation will present its full-year 2022 results on March 29, 2023, while the results in Q3 2022 show a thriving business. In the three months that ended September 30, 2022, revenue and net income attributable to common shareholders rose 33% and 28% to US$1.7 billion and US$136 million, respectively.

Constellation’s competitive advantage is its six operating groups servicing customers in nearly all industries and over 100 different markets worldwide. Most revenues come from software license fees, maintenance and other recurring fees, professional service fees and hardware sales.

Strong buy

Payfare is a strong buy following its record Q4 and full-year 2022 financial results. The $258.4 million financial technology company serves the gig economy, workforce, and platforms. It provides instant payment and digital banking solutions. At only $5.52 per share, the year to date return is 28.67%.

In the 12 months that ended December 31, 2022, revenue soared 210% to $129.9 million versus 2021. Its net loss dwindled 86.4% to $2.9 million from a year ago. Notably, operating cash flow hit a record $7.9 million. The $2.9 million net profit in Q4 2022 was also Payfare’s first positive earnings quarter.

Payfare’s CEO and Founding Partner, Marco Margiotta commented, “Looking forward to 2023, we couldn’t be more excited about the growth opportunities ahead.”

Beating the market

Some stocks tanked in 2023 because they couldn’t overcome the current headwinds. However, Fortis, Constellation Software, and Payfare continue to outperform and beat the market.   

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software and Fortis. The Motley Fool has a disclosure policy.

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