Although the macroeconomic headwinds appear to be subsiding and some dirt-cheap stocks have already begun to recover, uncertainty is high, and the potential for a stock market sell-off is still elevated. And while having cash in a stock market sell-off can be opportunistic, finding high-quality dividend stocks to buy and protecting your capital can also be advantageous.
Owning dividend stocks, especially high-quality and reliable dividend stocks, can offer several benefits for investors during a stock market crash, especially if the market is impacted for an extended period.
First off, many of the highest-quality and most robust dividend stocks aren’t very volatile. Investors know that their business operations are more recession-resistant, making them less likely to sell these stocks or be worried about impacts on their profitability.
In addition, though, because the demand for these safe stocks rises in a market sell-off (fewer investors are selling these stocks, while others are looking to buy them to shore up their portfolios), it wouldn’t be unusual to see them not lose any value at all, or even potentially increase slightly in value.
It’s also worth noting that during market sell-offs, particularly prolonged sell-offs, the dividend income you earn will likely be some of the only gains you see until the market recovers. And earning consistent cash flow, at a time when so many high-quality stocks are trading dirt-cheap after a sell-off, can certainly go a long way.
So, with that in mind, here are two of the top dividend stocks in Canada to buy in a market sell-off or to help shore up your portfolio today.
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Two of the best dividend stocks to buy whether there’s a market sell-off or not
When it comes to finding high-quality and reliable dividend stocks to buy, market sell-off or not, it’s paramount to find defensive businesses that are constantly generating significant cash flow.
That’s why Fortis (TSX: FTS), the high-quality utility stock, and CT REIT (TSX: CRT.UN), the retail real estate stock, are two of the best dividend stocks to consider today.
In Fortis’ case, utility stocks are well known as some of the highest quality companies you can buy. They offer essential services and are regulated by the government. In fact, over the last two decades, its normalized earnings per share has increased at a compounded annual growth rate of 6.1%.
That may not be the most explosive growth, but what’s impressive about Fortis is how consistent that growth has been. It also allows Fortis to increase the dividend each year, which it has done for an unbelievable 50 straight years now, which just goes to show why it’s one of the best dividend stocks you can buy.
And because the stock is constantly increasing its dividend, not only can you lock in a 4.4% yield today, but over the years, the passive income your investment generates will only continue to grow.
And while CT REIT may not be as reliable as Fortis (almost no stock is), the fact that its primary tenant, as well as majority owner, is Canadian Tire makes it an ideal dividend stock to buy now.
First off, Canadian Tire is a massive company. It’s one of the best-known retailers in Canada, and it has an impressive loyalty program. Plus, because Canadian Tire owns the majority of CT REIT and it accounts for roughly 90% of its revenue as its largest tenant, it would take something disastrous for CT REIT’s revenue and profitability to be significantly impacted.
Plus, not only is CT REIT a Canadian dividend aristocrat with 10 straight years of dividend increases, and not only does it offer an even higher yield than Fortis, currently at roughly 6.3%, but it’s also never had a year where its sales didn’t grow. That includes through the pandemic when many of its retail REIT peers were heavily impacted.
So if you’re looking for high-quality and reliable dividend stocks to buy now or add to your watchlist in case of a stock market sell-off, there’s no question that Fortis and CT REIT are two of the top picks for Canadian investors.
