3 Blue-Chip Stocks to Hold Tight in a Fluctuating Market

These three Canadian blue-chip stocks can be good investments to hold in a volatile market to protect your self-directed investment portfolio.

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Stock market investing can be a great way to leverage the economy’s strong performance in a bull market to grow your wealth rapidly. However, allocating money to stocks becomes significantly less attractive when the stock market is fluctuating amid volatile conditions. That said, the stock market still offers valuable opportunities for savvier investors.

Blue-chip companies are some of the best options for stock market investors, especially during uncertain market conditions. These are companies that have stood the test of time for decades and are here to stay, regardless of what happens in the economy. As well-established, well-capitalized, and solid underlying businesses, these stocks can weather the storm and come out stronger on the other side.

Today, we will look at three Canadian blue-chip stocks you can invest in during volatile markets to weather the storm and enjoy long-term wealth growth.

Canadian Utilities

Canadian Utilities (TSX:CU) is undoubtedly a strong pick for a defensive stance to stock market investing. The original Canadian Dividend King among utility stocks, Canadian Utilities is a $6.21 billion market capitalization business offering natural gas and electricity utility services. Headquartered in Calgary, it has operations in Canada, Australia, the U.S., and Mexico.

While utility businesses are boring since shares of these companies do not keep pace with the broader market during bull markets, the same quality makes them excellent defensive picks. Despite a downturn, Canadian Utilities stock continues to pay its shareholders their dividends without fail.

Relying on stable and predictable income, it can comfortably fund growing its payouts. As of this writing, it trades for $30.72 per share and offers a juicy 5.84% dividend yield.

Franco-Nevada

Franco-Nevada (TSX:FNV) is a blue-chip stock that offers growth potential when the broader market is trending lower. How? By offering its investors exposure to the performance of gold. Gold is a safe-haven asset that increases in value when the markets are down.

Businesses with significant operations involving gold can benefit from rising gold prices. However, traditional mining companies still feel the pressure of high interest rates impacting profitability.

Franco-Nevada stock offers investors exposure to gold but without an expensive business model. Instead of running its own mining operations, Franco-Nevada places financial stakes in various mining businesses. Through royalty contracts, it adds another layer of protection for itself, offering more financial stability to the company.

As of this writing, Franco-Nevada stock trades for $159.74 per share and pays a 1.18% dividend yield. It can be a good pick if you expect gold prices to rise in the coming weeks due to overall market conditions.

Metro

Metro (TSX:MRU) is a $15.96 billion market capitalization food retailer headquartered in Montreal. The company has food retail locations operating in Ontario and Quebec. The company has a business model that gives it a favourable position in volatile markets.

By offering convenience, competitive pricing, and easier shopping through its omnichannel platform, Metro stock consistently keeps improving its performance.

With plenty of promotions and loyalty programs in the mix, Metro stock can continue generating healthy cash flows, even when consumers are cutting discretionary spending.

As of this writing, Metro stock trades for $69.74 per share, paying its investors at a 1.74% dividend yield. It can be a good addition to your self-directed portfolio.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Metro Inc. made the list!

Foolish takeaway

Blue-chip stocks are not immune to market volatility. When market downturns hit, share prices of even the best-performing stocks can decline.

If the underlying business is solid and capable of weathering tough conditions, it can be a good investment to hold during market fluctuations. While share prices might decline in the short term, blue-chip stocks offer plenty of long-term growth to compensate for these rough patches.

Canadian Utilities and Metro stock offer a defensive approach to investing in blue-chip stocks. Investing in Franco-Nevada stock gives you the chance to leverage rising gold prices amid inflationary conditions to grow your wealth. By creating a well-balanced portfolio, you can use blue-chip stocks to your advantage in volatile market conditions.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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