The TSX Index finished last Friday’s session with a 1.5% dip as investors on both sides of the border weighed the potential effect of tariffs. Indeed, the Bank of Canada governor Tiff Macklem recently warned of the structural impact of 25% tariffs and that a bounce-back won’t be in the cards like the one we experienced after lockdowns were lifted from the COVID-19 crisis. That’s concerning news, to say the least.
And while I would take such commentary seriously, I find no need to panic, especially if your long-term portfolio is on the right track. If the road higher gets harder for the TSX Index over the next three years, you’ll want to be paid a fat dividend to wait. And preferably, a slightly lower correlation with the TSX Index (think lower betas) would be seen as desirable. In this piece, we’ll look at a stock that could be a great way to play defence, whether you’ve got $500 or $5,000 to put to work.
As always, fasten your seatbelt and be ready for anything to hit as Canada looks to do its best to dodge and weave past the pains of tariffs. While avoiding the heavy blow from tariffs will be virtually impossible, self-guided investors can put their guard up to ensure they’re still standing once the punches come their way as soon as March. Indeed, tariffs are so incredibly stressful to think of as the countdown to the end of February continues.
As always, no security can completely protect you once market volatility returns with full force. Just stay calm, think long term, and try to view any violent dips (like the one suffered in Friday’s session) as more of an opportunity to put cash to work.
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Nutrien
I would have thought Nutrien (TSX: NTR) stock would have tumbled in the face of potential tariffs. The stock has been quite resilient in the past three months, rallying by more than 14% in the past three months. Of course, Trump tariffs have made the stock a bit choppier, but after shedding nearly half of its value from 2022 peak levels, NTR stock arguably has already faced the worst of the headwinds and negative headlines. Arguably, the stock was oversold by enough to entail deep value despite the continuation of any tariffs in 2025.
Recently, Nutrien stated that tariffs would hurt U.S. farmers and weigh heavily on their earnings. Given that Nutrien’s agricultural commodities are vital to enhanced crop yields, I’d argue that President Trump has plenty of reason to reconsider wide-sweeping tariffs. Indeed, given the market’s recent reaction to potential tariff headwinds, perhaps it’s time to start thinking about what could go right. It’s hard to be a contrarian, but I do think that Nutrien is too pivotal to put down, even if tariffs end up weighing. The stock has a 4.11% dividend yield that investors can collect as they ride out a storm.
At just 14.6 times forward price to earnings (P/E), Nutrien stock looks like a huge bargain, especially when you consider its cost advantages in the agricultural commodity space.
