Ready for Volatility? 2 Dividend Stocks I’d Hide Out in Today

Canadian Utilities (TSX:CU) and another dividend stock are looking way too cheap in April 2024.

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It’s been a rather turbulent start to the second quarter, with the S&P 500 moving sharply in both directions. A market correction is always a possibility, but investors shouldn’t assume every 1% or 2% down day is the beginning of a 10-15% pullback.

With stocks ending the day up on Friday’s upbeat session, investors should opt to inch gradually into stocks rather than waiting for the perfect moment (in many cases, that’s the local market bottom). No beginning value investor desires to buy at a market top. And with stocks flirting with all-time highs, there’s always the chance that you could get in at the most inopportune moment.

If you’re an investor, though, and not just a trader looking to make a quick buck, you probably shouldn’t be too rattled by buying the face of a market pullback. It happens to the best of us. But the good news is you can always buy more stock at lower prices if the markets do correct and sentiment takes a sort of 180-degree shift from greed to fear.

In fact, I’d argue that if you’re a young investor, like a Millennial or Zoomer, you should hope for stocks to sink, even if you’ve got quite a bit of skin in the game.

Why?

Your best earning years are likely ahead of you. That means you should hope that every portion of your future paycheques can be put toward stocks at lower, cheaper prices. Indeed, through your investing lifetime, you’ll probably be better off if you had the opportunity to sprinkle in a few bucks during market corrections and pullbacks.

Either way, when you think of investing as playing the long-term game, those month-to-month movements won’t move you as much. With time and experience as an investor, perhaps you’ll be numb to the market-moving day-to-day action as you look to seize opportunities on near-term blips rather than making big changes to your portfolio aimed at creating wealth over the course of numerous decades.

Without further ado, here are two dividend stocks to roll with the punches.

North West Company

North West Company (TSX:NWC) is a retail play that concentrates on remote parts of North America that may be a tad too far for most grocers we’re familiar with to access. Indeed, the stock, which trades at 14.85 times trailing price to earnings, is a great way to fight volatility. How?

Apart from the 3.97% dividend yield, there’s the low 0.63 beta, which entails less correlation to the rest of the TSX. Of course, grocery plays have felt backlash on social media. And North West’s pricing has been subject to criticism. Regardless, I view the stock as a great long-term play for low-volatility investors.

Canadian Utilities

Canadian Utilities (TSX:CU) stock has been in a rut alongside many other utility plays that haven’t been huge fans of the high-rate environment.

In any case, I remain a big fan of the stock while it’s sporting a commanding 5.91% dividend yield. Still off more than 29% from its 2020 highs, CU stock strikes me as a deep value play given its cash-generative assets and mere 12.9 times trailing price-to-earnings multiple.

With a $6.1 billion market cap, CU is more of a mid-cap utility play, though, and one that could stay undervalued for longer as it flies under the radar of most investors.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends North West. The Motley Fool has a disclosure policy.

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