Canadians might be hearing more and more about the possibility of a mild recession, or even no recession at all. For now, though, we remain in at least a bear market, with the economy not exactly doing amazing at this point.
So, that means it’s still a great time to look for stable stocks to add to your portfolio — specifically, stable dividend stocks. These would be companies that you can pick up for a deal that offer solid dividends and provide stable income.
Let’s get into two dividend stocks that can provide you with that today.
Royal Bank
It might not seem like Royal Bank of Canada (TSX:RY) would be a great choice ahead of a recession, if we’re to get one. After all, I’m sure some of you have already seen the American banks that aren’t doing well, and, in fact, some that have gone belly up.
However, Canadian banks are in an entirely different category. There isn’t the competition here that there is in the United States. This can be both good and bad, but right now, it’s squarely a good thing. Canadian banks aren’t about to go under, as they have an oligopoly on the market. This allows them to collect provisions for loan losses to be used in times like this.
And of them all, Royal Bank stock remains a solid option. It’s the largest of the Canadian banks and sees stable income come in from its large exposure to wealth and commercial management. While it certainly has exposure to the U.S., it also balances that with emerging markets, corporate banking, and capital markets.
Finally, Royal Bank stock continues to do well even now. While other Canadian banks are down, Royal Bank stock is on par with where it was a year ago. It currently holds a dividend yield at 4.03%, so you can bring in this stable company with your other dividend stocks and know it’s totally safe.
A&W Income Fund
Another of the dividend stocks that Canadian investors should consider is the A&W Revenue and Royalties Income Fund (TSX:AW.UN). This fund has two benefits for investors. You can receive growth from the company’s growth in revenue but also through its royalties income stream.
The company brings in stable cash flow from its trademark, to be used at its 845 franchised locations across Canada. That combined with revenue growth creates stability and growth for investors as well. So, while you might think that investing in a restaurant doesn’t sound all that safe, in this case, it certainly is.
Cash flow from franchises remains stable as no matter the market, these franchise owners need to pay their dues. That’s stable income on a regular basis. As long as the market doesn’t all of a sudden go under in a big way, leading to franchise closures, then A&W stock remains a safe investment.
Therefore, if you want an investment in the restaurant industry, but with far less risk, A&W stock might be your best and certainly safest choice. Even so, shares are down 5.5% in the last year, providing you with a high 5.18% dividend yield at this point. So, I would certainly consider it among your other dividend stocks.
