If there were a single word to define how the market has moved this year, it would be volatile. And given the prospects of a prolonged trade war, market volatility won’t be dissipating anytime soon.
Fortunately, investors can take some solace in knowing that some investments will defend their wealth in any trade war. Here are a few of those defensive gems to consider buying this month.
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You can’t mention defensive stocks without thinking of this stock
Most long-time investors are aware of Fortis (TSX: FTS). For those unfamiliar with the stock, Fortis is one of the largest utility stocks on the market.
Utilities like Fortis are excellent defensive stocks to consider, even during a trade war. The reason for that can be traced back to the lucrative business model that utilities follow.
In short, utilities provide a service for which they are compensated. The terms for that service are set out in regulated contracts which span decades in duration. This means that utilities can generate a stable, recurring revenue stream that can last decades.
In the case of Fortis, the company boasts ten operating regions across the U.S., Canada, and the Caribbean. That stable revenue stream means that Fortis can invest in growth initiatives while paying out a handsome dividend.
As of the time of writing, that dividend is a juicy 3.86%, making this a superb pick to own during any trade war.
Investors should also note that Fortis provides annual upticks to that dividend. Fortis has provided investors with over 50 consecutive years of increases.
How about the perfect buy-and-forget candidate?
Investors looking for some shielding in any potential trade war have yet another option to consider. Toronto-Dominion Bank (TSX: TD) represents a unique investment opportunity that offers growth potential and a tasty income to investors.
TD is the second-largest of Canada’s big bank stocks, with a large network that blankets Canada and the U.S. East Coast. That U.S. presence represents TD’s core growth market, where its network stretches from Maine to Florida.
While the U.S. market provides growth, TD’s dominance in the Canadian market helps the bank generate a predictable revenue stream that leaves room for growth investments as well as a tasty income.
That income comes in the form of an appetizing quarterly dividend that currently pays out an impressive 4.81% yield. Like Fortis, TD has an established history of providing investors with generous annual bumps to that dividend.
Top it off with another defensive option
A third option for investors looking to shield their portfolio from a trade war is Alimentation Couche-Tard (TSX: ATD).
For those unfamiliar with the stock, Couche-Tard is one of the largest convenience store and gas station operators on the planet. Gas stations and convenience stores may not initially sound like a defensive investment.
The reality is that Couche-Tard is an incredibly defensive holding that will weather any trade war. There are several reasons for investors to consider.
First, we have Couche-Tard’s size. The company has a massive presence in over two dozen countries around the world. In North America alone, Couche-Tard has over 9,000 locations. That immense size provides a recurring revenue stream for investors, fueling the defensive appeal of the stock.
The second point to note is Couche-Tards appetite for expansion. Couche-Tard’s history of acquisitions and realizing synergies from those acquisitions is in a word, impressive. The company has sought out increasingly more significant acquisitions over the years.
In fact, Couche-Tard’s latest target is the iconic Japan-based 7-Eleven brand.
Buy these stocks to counter trade war volatility
No stock, even the most defensive, is immune to risk. Fortunately, the trio of stocks mentioned above can provide investors with growth prospects despite market volatility.
In my opinion, one or all of these stocks should be core holdings in any well-diversified portfolio.
