2 Stocks That Could Beat a Bear Market

There are plenty of great stocks to consider right now to beat a bear market. Here are two must-haves for any portfolio.

| More on:
Illustration of bull and bear

Image source: Getty Images.

If there was a single word that describes how the market has performed in 2023 it would be volatile. That volatility has helped push the market into a bear market. And while the market gyrations may be temporary, it is important for investors to have stocks in their portfolios that can beat a bear market.

Here are two great stocks that can not only beat a bear market but actually thrive in one.

Start with a defensive pick that can provide an income, too

Fortis (TSX:FTS) is a well-known stock for defensive-minded investors. For those who are unfamiliar with the stock, Fortis is one of the largest utilities in North America. The company boasts 10 operating regions across the U.S., Canada, and the Caribbean.

Utilities like Fortis generate a stable revenue stream thanks to their lucrative business models. In short, utilities provide a service that is backed by long-term regulated contracts. Those contracts span decades in duration, which in turn provide a reliable and recurring revenue stream.

The sheer necessity of the utility service that Fortis provides makes it a compelling option to beat a bear market. This is because, unlike other expenses that consumers cut back on during a downturn, people cannot cut back on basic necessities like utilities.

That stable and recurring revenue stream allows Fortis to invest in growth and pay investors a handsome dividend. As of the time of writing, the yield on that dividend works out to 4.2%.

For those investors who drop $30,000 into Fortis (as part of a well-diversified portfolio), that translates into an income of just over $1,200. Recall that investors who are not ready to draw on that income can choose to reinvest it until needed. This allows an eventual income stream to grow further.

Additionally, Fortis has provided an annual uptick to that dividend for an incredible 50 consecutive years. That fact alone makes Fortis not only a stock to beat a bear market but also an option to buy and hold for long-term gains.

That’s part of the reason why Fortis is one of just a handful of companies that isn’t trading down this year. In fact, Fortis is up 4% year to date, which handily puts it into beat-a-bear-market territory.

Banking on success

When compiling a list of stocks to beat a bear market with, I would be remiss if I didn’t mention at least one of Canada’s big banks. The big banks offer stable revenue, long-term growth and a juicy dividend, and that makes them a must-have for any portfolio.

The one bank that investors should turn to in this market is Bank of Montreal (TSX:BMO). BMO is the oldest of the big banks and has been paying out dividends for nearly two centuries without fail.

Today, that yield works out to a very appetizing 5.24%. This means that investors with $30,000 to invest in BMO can expect to generate a first-year income of north of $1,500. Factor in annual bumps to that dividend and reinvestments, and investors can expect to earn a handsome income over the long term.

Turning to growth, in addition to its core domestic network, BMO also operates a growing U.S. segment. That U.S. segment represents a unique growth opportunity for investors, which can be traced back to the acquisition of California-based Bank of the West.

That deal, which was completed earlier this year, exposed BMO to several new US state markets including California and expanded the bank’s presence into 32 state markets. Additionally, the deal also brought in 1.8 million new customers and billions in loans and deposits.

Collectively, BMO’s growth potential, tasty income, and reliable revenue stream make it a superb option for long-term investors.

Final thoughts to beat a bear market

No stock, even the most defensive is truly immune to market volatility. And when the market does shift to bear territory, the first reaction is often to sell and seek shelter. Fortunately, both BMO and Fortis mentioned above provide ample defensive appeal to investors.

In my opinion, maintaining a position in both stocks is a great way for long-term investors to not only beat a bear market but thrive in one.

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 Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Arrowings ascending on a chalkboard
Stocks for Beginners

Analysts: Prepare for Stocks to Outperform Fixed Income in 2024

Strategists believe that there is going to be some major growth in 2024, with stocks leading the charge. But this…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

Navigating the World of REITs: Dividend Gems in the Canadian Real Estate Sector

Real estate stocks remain some of the best options for dividend income, but these two are the ones I'd consider…

Read more »

value for money
Stocks for Beginners

Seeking Value in a Declining Market: Canadian Stocks at a Discount

These Canadian stocks offer major value, with shares down but already on the recovery, as the TSX today looks to…

Read more »

sad concerned deep in thought
Stocks for Beginners

I Was Wrong About Goodfood Stock

Goodfood (TSX:FOOD) stock looked like a winner back in 2020, with all of us needing food at home. But since…

Read more »

Growing plant shoots on coins
Stocks for Beginners

Got $2,000? 2 Top Growth Stocks to Buy Hand Over Fist Now

Here are two of the best Canadian growth stocks you can buy with an investment as low as $2,000 before…

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Thursday, November 16

Despite no corporate results, TSX stocks may remain volatile, as investors continue to react to recently released important U.S. inflation…

Read more »

stock analysis
Stocks for Beginners

Solopreneurs: Stop Fearing the Future. Prepare for it!

Solopreneurs have had a difficult last few years, but don't give up on your future! Simply prepare for it with…

Read more »

Question marks in a pile
Stocks for Beginners

Up 27% in 2023, Is FirstService Stock Worth a Buy Today?

FirstService (TSX:FSV) stock has risen dramatically this year, with analysts expecting even more growth. But can it keep up in…

Read more »