The last two years saw unexpected momentum in some sectors, like tech, oil and gas, real estate, and banks. In 2020, oil and real estate stocks crashed while tech stocks flourished. The situation reversed in 2021 and aggravated in 2022, as rising interest rates made mortgages expensive and reduced house prices. Then the U.S. bank crisis pulled down bank stocks in March 2023. Such sector-specific incidents have confused investors investing monthly or quarterly on which stocks to continue buying.
Two TSX stocks to continue buying in a volatile market
In a bear market, one of the safest stocks to invest in are dividend heavyweights that have withstood the worst crises without dividend cuts. Now is the time to invest in these stocks and lock in a dividend yield of over 6.5%. A 6.5% yield can double your money in over 11 years. It is also a good time to buy resilient growth stocks giving your portfolio a chance to outperform the market.
TC Energy stock
TC Energy (TSX:TRP) stock slipped 24% from its June 2022 peak, when oil prices peaked at US$125. It underperformed other oil and gas pipeline stocks that fell 9-15% from the June 2022 peak due to ballooning project costs. Energy infrastructure companies spend significant capital to build infrastructure. This infrastructure generates toll money for allowing oil and gas to flow through its pipelines.
But building pipelines is not easy. Environmental impact and other factors could lead to costly delays in the project. Pipeline companies cannot transfer the cost of these delays to consumers, as toll rates are regulated. Hence, when TC Energy more than doubled the cost estimate for the Coastal GasLink pipeline project to $14.5 billion, analysts questioned the feasibility of the over-budget project.
TC Energy reduced the surplus cost ($3 billion) of the project from its operating profit. That is an expense the company has to bear. A $3 billion reduction reduced its profits to below $1 billion, and the stock underperformed. Another year of delay could add $1.2 billion to the cost.
The good news is the gas pipeline project is 84% complete. There are chances that it could be completed by the end of the year. Once the pipeline is operational, TC Energy could see the cash flows come.
As for its 3-5% dividend growth, the company can maintain this growth momentum from its other projects that are doing well. The project weakness is the time to keep buying TC Energy stock and lock in over 6.5% dividend yield. You can also benefit from a rally as the Coastal GasLink pipeline helps TC Energy tap North America’s liquefied natural gas exports.
Descartes Systems (TSX:DSG) helps companies transport goods, services and information from one place to another efficiently. Its supply chain management solutions cater to various verticals from airlines to e-commerce. As long as there is domestic and international trade across states or across the street (last-mile delivery of e-commerce), Descartes will continue to earn revenue.
The last two years saw a remarkable change in the demand for its services. Its fiscal 2022 (ending January 31, 2022) revenue surged 21.8%, driven by sales of its regulatory solutions from the United Kingdom due to Brexit. Its fiscal 2023 revenue surged 14.4%, driven by sales of its global trade intelligence solutions. While the tech stock selloff pulled the stock price down 35% in the first half of 2022, the supply chain constraints following the Russia-Ukraine war kept demand strong for Descartes.
It is among the few stock that has recovered 95% to its 2021 tech bubble peak. The recovery shows the resilience of Descartes’s share price and its long-term growth trend. It is a stock you can buy anytime and hold for a long term to get double-digit growth.
When market volatility is high, small monthly or quarterly investments in the above two stocks could help you beat the market and get a double-digit return.