3 Low Volatility Stocks for Smoother Sailing

Stocks like Fortis and BCE offer investors low volatility options along with strong dividend histories and yields.

| More on:
protect, safe, trust

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Volatility – it’s a double-edged sword. While we love it when it’s moving in the right direction, it can be hard to take, even disastrous, when it goes the wrong way. This brings me to a lesson I learned early on in my investing career – protecting yourself from the downside is just as important as trying to capture the upside. Low volatility stocks can help with this.

While they’re not a quick and instant path to riches, they are dividend stocks that can provide consistent long-term growth in capital and income without the downside risk.

Fortis stock: A strong long-term track record with little volatility

I talk about Fortis Inc. (TSX:FTS) a lot. That’s because of this stock’s low volatility, predictability, and dividend history. The price of a volatile stock can change dramatically in either direction, leaving shareholders feeling nervous and tense. The businesses that often underlie these stocks are also volatile and uncertain.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Stocks like Fortis are the exact opposite of this. This is because Fortis’ business is predictable, stable, and steady. It is a utility, after all. And a utility has the benefit of being an essential service, which means that demand does not fluctuate with the economy or with the latest whims. It also means that Fortis’ revenue is regulated, and guaranteed a specific return. These are qualities that support Fortis’ low volatility journey.

Fortis’ dividend history is the result of its steady and predictable business. Fortis has a 49-year history of dividend increases. Also, in the last 28 years, Fortis stock’s dividend has grown at a compound annual growth rate of 6.2%, from $0.42 per share to the current $2.26 per share. It’s almost 440% higher today than it was back in 1995.

CCL Industries: A defensive packaging company that also offers strong growth

Another low volatility stock that I’d like to single out is CCL Industries Inc. (TSX:CCL.B). CCL is a $12-billion label and packaging company that has grown consistently and profitably over the long-term, both organically and via acquisitions. This, in turn, has created shareholder wealth, through both capital appreciation and dividend payments.

Created with Highcharts 11.4.3CCL Industries PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

In fact, in the last 10 years, CCL has grown from revenue of $1.3 billion in 2012 to $6.4 billion in 2022. This represents a compound annual growth rate (CAGR) of more than 17%. And the corresponding steady increase in cash flow and dividends is just as impressive. For example, CCL’s operating cash flow has grown at a 10-year CAGR of 11.5% to $992 million in 2022.

With a product assortment that isn’t particularly economically sensitive, a global manufacturing network, and a strong balance sheet, CCL is a low volatility stock that’s well positioned to continue to drive shareholder value.

BCE stock: Canada’s leading telecom stock

BCE Inc. (TSX:BCE) is another low volatility stock that has a strong history of predictable and steady returns. Today, BCE is yielding a very generous 6.15% as the telecom giant continues with its network expansions and improvements. As we can see from BCE stock’s price graph below, it has been the picture of stability.

Created with Highcharts 11.4.3Bce PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The economy is increasingly under risk from higher interest rates and inflation. But this shouldn’t really phase BCE much, as the company operates in the highly defensive telecom industry. It is this lack of economic sensitivity that has allowed BCE to continue to generate steady and predictable results over the long term. It’s also what has given BCE stock its low volatility profile.

In 2022, BCE reported cash flow from operations of $8.4 billion, 4.5% higher than 2021. And while the first quarter of 2023 was challenging as BCE felt the negative effects of cost pressures and a softer economy, management continues to expect growth in 2023. In fact, they expect that the dividend will be raised another 5.2% this year.

Should you invest $1,000 in BCE right now?

Before you buy stock in BCE, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BCE wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Karen Thomas has a position in BCE. The Motley Fool recommends CCL Industries. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

e-commerce shopping getting a package
Dividend Stocks

Consumer Spending Plays Amidst the Current Market Dip

Consumption may go down in market dips, but certain consumer stocks are certainly better off than others.

Read more »

Asset Management
Dividend Stocks

12% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades

Stocks with high-dividend yields carry risks. But they could be a good long-term investment. Here is a 12% dividend stock…

Read more »

Canadian flag
Dividend Stocks

How I’d Build a Foundation of Canadian Value Stocks in My Investment Strategy

Canadian investors can explore iShares Canadian Value Index ETF for value stock ideas to build a foundation for their diversified…

Read more »

Canadian dollars are printed
Dividend Stocks

How I’d Transform a $30,000 TFSA Into a Cash-Flow Machine

Here's why TFSA investors should consider owning dividend stocks such as Mullen Group in 2025.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Dip Buyers Could Win Big in Today’s Market Dip

If you want to buy the dip, think long-term. Which is why this TSX stock is a top option.

Read more »