This bear market seems like it’s going to go on forever, doesn’t it? Well, news flash: it won’t. And that’s why now is the best time to either start investing in companies that provide some defense, or at least add them to your watchlist.
That’s why today we’re going to look at some defensive sectors to invest in, as well as some Canadian stocks that investors can grab during this bear market. So let’s get right into it.
Utilities
Utility stocks are some of the best options for Canadians to consider. These defensive stocks provide you protection because no matter what, we’re going to need the essential services. They provide the power behind your drinking water, your car, heck even the computer I’m writing on right now.
That’s because these companies tend to do well both during and after a downturn such as this one. You can look forward to them returning right back to normal, given they have long-term contracts that will continue to keep the power on. No matter what.
With that in mind, I would consider a utility stock such as Hydro One (TSX:H). The reason is because it’s a fresh face on the market. You can get in on practically the ground floor and look forward to long-term contracts coming in that will boost the share price.
Right now, Hydro One stock trades up 9% in the last year, providing protection, with a 3.41% dividend yield.
Infrastructure
Another essential area of the market is infrastructure. Again, these companies are the backbone of our country and those around the world. They create the cell towers we need, the roads we drive on, the sewers we use. Everything. So again, these essential companies are another great area to look for when considering defensive stocks.
Yet, it does get tricky here. There are a few companies that suffered during the pandemic, and are now infrastructure companies struggling to get back. So I would consider one area of infrastructure that will remain strong no matter what: waste management.
No matter what happens, as we’ve seen, garbage and recycling shall be collected. This is a service that will stand the test of time. That’s why I would consider investing in a company such as Waste Connections (TSX:WCN). The company has continued to meet or beat earnings estimates, expanding through North America in the process.
Shares of Waste Connections stock are down just 2.6% in the last year, with a dividend at 0.86%.
Essentials
We’ve talked about essential sectors, but there are essentials we also need to purchase on a regular basis. We still need to buy food, clothes, and other items. But we’re hoping to do so at a lower cost. That’s why low-cost retailers tend not just to survive during downturns, but thrive. That’s why they too can be defensive stocks.
There really is only one Canadian stock then to consider in this capacity, and that’s Dollarama (TSX:DOL). Dollarama stock has maintained a strong position through the pandemic and through this downturn. And that comes from multiple sources.
First, there’s more Canadians shopping at the discount retailer to find lower prices. Then, there’s the fact it now has more recognized brand names than ever before. Finally, it’s expanding. This includes through store openings, as well as its Dollar City investment in Latin America.
Shares of Dollarama stock are up 21% in the last year, with the company offering a 0.27% dividend yield.
