Turn Market Fear Into Opportunity: Strategies for Canadian Investors

Market fear isn’t always a bad thing. Investors can instead see it as an opportunity for growth and income-earning potential.

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

Rising interest rates and rampant inflation have made 2023 a very volatile time for investors. That volatility leads to market fear, which resonates with some investors, particularly newer investors.

Fortunately, there is a different way to look at market volatility. Here’s a look at some of the options for investors to consider, including some stellar stocks to buy.

Turn that fear into an opportunity

When market volatility hits, some investors get tempted to sell. Rather than selling, what investors should focus on is the opportunity that gets exposed.

Specifically, there’s an opportunity to leverage that market fear and pick up some great long-term stocks at a huge discount.

One such example that investors should look at is Canadian Imperial Bank of Commerce (TSX:CM).

What’s the opportunity that CIBC holds for investors staring down market fear?

That comes down to three key points: a reliable business model, a very juicy dividend and a whopping 17% discount on the stock price over the past 12-month period.

Canada’s big banks are among the safest long-term investments on the market. Furthermore, they have historically fared better than their U.S.-based peers during times of volatility. This makes it an excellent time to buy a stellar bank at a huge discount.

That discount also means that CIBC’s dividend has swelled. As of the time of writing, the yield now boasts an insane 6.70%. This makes it one of the highest among its big bank peers and one of the better-paying options on the market.

Buy for the long term

Investing, particularly during volatility and times of market fear, is a long-term play. And that’s why BCE (TSX:BCE) should also be on the radar of investors.

The telecom behemoth currently trades down 13% over the trailing 12-month period. During that same time, that dip has helped push BCE’s dividend to an insane 7.14%. And that has some investors concerned about how the telecom will act in an environment of rising interest rates.

BCE has paid out dividends for well over a century without fail. The telecom has also provided generous upticks to that dividend on an annual basis for over a decade.

So, then, why should investors consider BCE right now?

BCE provides an increasingly necessary bucket of subscription services. If anything, the need for those services has only increased in recent years. And the expected bump in revenue thanks to holiday spending is just starting to kick in.

In other words, investors should look at BCE as a long-term play and forget short-term market fear.

Earn some income with a set-and-forget stock

Another great option for investors to consider is buying a defensive gem. Often, those defensive gems can provide a decade or more of growth on autopilot thanks to dividend reinvestments.

A great example of this is Fortis (TSX:FTS). Fortis is one of the largest utilities on the continent, with operations across Canada, the U.S., and the Caribbean.

The main benefits of investing in a utility stock like Fortis can be traced back to its stable business model and juicy dividend.

Utilities are some of the most stable investments on the market. They generate a reliable and recurring revenue stream that is backed by regulated contracts. That revenue stream also allows them to reinvest in growth initiatives and pay a handsome dividend.

In the case of Fortis, that quarterly dividend works out to an impressive 4.18% yield. And Fortis has provided investors with an annual uptick in that dividend for 50 consecutive years.

That makes the stock a great option for long-term investors looking for a set-and-forget investment. Throw in the defensive appeal that Fortis’s business provides to minimize market fear, and you have an excellent option for any well-diversified portfolio.

Forget market fear and look for the opportunity

No stock is without some risk. Even the most defensive stocks on the market, like Fortis noted above, are not completely immune to volatility caused by market fear.

Fortunately, the stocks mentioned above are well-diversified options that, in some cases, can be purchased at hefty discounts.

In my opinion, one or more of these stocks should be core holdings in any well-diversified portfolio.

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 Demetris Afxentiou has positions in BCE and Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

close-up photo of investor Warren Buffett
Stocks for Beginners

The Best Warren Buffett Stocks to Buy With $300 Right Now

These Warren Buffett stocks have long histories of growth, each offering their own reasons for why investors need them today.

Read more »

Technology, internet and networking, security concept
Tech Stocks

3 Things You Need to Know If You Buy Celestica Stock Today

Celestica stock (TSX:CLS) has surged an insane 215% in the last year. So is it now overvalued? Or should investors…

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

Better Buy: Brookfield Asset Management or Fairfax Financial Stock?

Both of these stocks are certainly strong. But when it comes right down to it, which offers the best deal…

Read more »

Different industries to invest in
Tech Stocks

This Ridiculously Cheap Warren Buffett Stock Could Help Make You Richer

Warren Buffett jumped out and back in to this stock, so what should investors consider before buying in bulk as…

Read more »

Happy shoppers look at a cellphone.
Stocks for Beginners

3 Things About Aritzia Stock Every Smart Investor Knows

Aritzia (TSX:ATZ) stock may be down 14% in the last year, but it has climbed 67% in the last few…

Read more »

Target. Stand out from the crowd
Stocks for Beginners

1 Growth Stock Down 18% to Buy Right Now

Shopify (TSX:SHOP) stock dropped after earnings projected further low results in 2024, but this could be your opportunity to jump…

Read more »

Growing plant shoots on coins
Stocks for Beginners

4 Growth Stocks to Buy and Hold Forever

Are you wondering what kind of Canadian growth stocks could be worth holding forever? Here are four stocks that could…

Read more »

Utility, wind power
Energy Stocks

Brookfield Renewable Partners Stock: Buy, Sell, or Hold?

BEP stock (TSX:BEP.UN) now trades at half its share price back in 2021. So what should investors do with this…

Read more »