Whenever global markets get shocked by a volatility surge, there may be a rush back to the boring, stability plays. Indeed, the stocks with low betas, wide moats, and reliable dividends tend to return to the spotlight when investors look to take risk off the table en masse.
Of course, it’s best to have exposure to steady stability stocks before a shocking black swan event (think the recent unwinding of the Yen carry trade, which tanked the Japanese stock market) has a chance to happen. In any case, truly terrifying and unpredictable events may not spare the stability plays as investors seek to raise cash by selling off various companies to meet their liquidity needs.
In this piece, we’ll look at two “unshakeable” dividend stocks that investors can comfortably hold through chaotic and euphoric markets.
Regardless of how willing investors are to “overextend” themselves on the risk front, the following stable dividend stocks seem like great bets for long-term investors who can’t be bothered to hit the panic button when they should be aggressively smashing the buy button with both hands.
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Loblaw
Loblaw (TSX: L) is a Canadian grocery stock that’s in a pretty unstoppable bull market. Undoubtedly, the firm may have made headlines for all the wrong reasons as consumers grew outraged over higher prices at the local Loblaw-owned supermarket. And with the bread price-fixing lawsuit also giving Canadian consumers a bitter taste in their mouths, questions linger as to why the stock can’t seem to be rattled. Year to date, L stock is up close to 30%, putting the TSX Index (which is up 7%) to shame.
Undoubtedly, the company keeps posting solid quarter after solid quarter. For the second quarter, the Canadian grocery giant clocked in earnings per share numbers that were just a hair above the consensus. That said, the firm sounded quite upbeat about the path ahead.
At 24.9 times trailing price-to-earnings (P/E), L stock is pricier than the grocery peer group. However, the premium multiple may very well be worth paying up for. Perhaps analyst Vishal Shreedhar of National Bank of Canada (TSX: NA) put it best: the grocer’s “consistent execution” and “higher return on invested capital vs. peers” make it a grocery stock to reach for first!
With strong momentum, a mere 0.17 beta (which entails below-average market risk), and a nice, growing 1.2%-yielding dividend, L stock may be worthy of one’s buy list as we close off the year.
Waste Connections
Waste Connections (TSX: WCN) is a waste collection service provider that’s been sailing steadily higher, even amid the recent market hurricane. The stock is up around 25% year to date, just a hair shy of all-time highs, thanks in part to solid quarters and smart moves made by management.
At 54.1 times trailing P/E, WCN stock is not cheap. But with a track record of unlocking value via M&A and one of the most economically durable business models on Earth, I’m not against buying at close to $250 per share. It’s a premium price tag, but one that’s worth paying.
After all, it’s hard to find such a resilient growth company with exceptional managers and sky-high barriers to entry. Also, with a growing 0.6%-yielding dividend and a 0.71 beta (less correlation to the TSX), the name seems likelier than not to shrug off any TSX-wide sell-off that may be ahead.
