Bears in the Market: Why it’s the Best Time for Canadians to Diversify

Diversification is key if you want to create long-term income, but this bear market offers even more in the short term.

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Diversification is one of the best ways to ensure the future of your investments. That’s because when one sector goes down, another can certainly go up. This is why a bear market is an excellent time to invest, as there are multiple sectors down due to rise again.

Therefore, today, we’re going to look at three sectors and stocks to invest in on the TSX today.

Infrastructure

Perhaps one of the best options for investors out there is infrastructure. These companies provide the essentials to our everyday life. Whether it’s driving to work on the highways, taking the train, or making a call from a cellphone, everything comes down to infrastructure.

There have been quite a few infrastructure companies that fell during the pandemic and now have guaranteed backlogs bound to produce. One such example is Aecon Group (TSX:ARE). The company continues to strengthen its bottom line and has been steadily rising in share price since its recent earnings report.

Shares of Aecon stock are now up just 5% in the last year but jumped 6% after earnings. So, if you’re looking for a quick turnaround in a bear market, this could be the one. Add on that it trades at just 4.91 times earnings and offers a 6.92% dividend yield and you’ve got yourself a deal.

Utilities

Another essential area of the market is utilities. These companies also provide strength because of their essential service to the community. Utilities power our homes, businesses, pretty much everything. They also provide a diverse set of energy production, which will help as we transition towards renewable energy.

What’s more, utility stocks tend to have long-term contracts. This is the case for Canadian Utilities (TSX:CU), a Dividend King that’s used its revenue to increase acquisitions and dividends. In fact, that Dividend King status means it’s increased its dividend for the last 50 years!

Yet after utility stocks climbed at the beginning of this bear market, shares are still down. You can pick up the stock trading at just 14.18 times earnings, with shares down 16% year to date. Yet again, there’s been some recovery, with shares up in just the last two weeks.

Banks

I get it, banks have been touted as risky by many. However, in Canada, it’s a very different situation. We have an oligopoly of banks that provide just a few options for Canadians to consider. This allows for more revenue to be collected, allowing for banks to pile on provisions for loan losses.

So, even though shares are down for most of the Big Six banks, you can bet they’ll climb back up quickly. In fact, they’ve all done so, hitting 52-week highs within a year of hitting 52-week lows. Yet, of all of them, I would consider Canadian Imperial Bank of Commerce (TSX:CM) — mainly because it’s doing the worst.

CIBC stock is bound to return to normal out of a bear market and when the housing market returns to normal. For now, shares trade at just 10.64 times earnings, offering up a 6.72% dividend yield. Meanwhile, shares are still down 20% in the last year, so get in on this deal!

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 Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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