Market volatility can be scary when you are new to investing in stocks. But volatility can be both a blessing and a curse.
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Investing is as much about emotions as it is about making smart investments
It’s a blessing because you can buy high-quality stocks when they are discounted in price. As famous investor Warren Buffett humorously quoted: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
However, it can be a curse because the emotional response to a market downturn can be very challenging. Psychologists have found that stock market declines tend to trigger a higher emotive response than stock market gains.
Consequently, when stocks sell off, it can feel like the world is falling apart. New and old investors alike often fall for the trap of selling at or near the bottom.
Stock market investing is as much about managing your psychology and emotions as it is smartly picking your investments. If you are looking for stocks that should not give you too much grief (and generally provide steady income and gains), here are three to hold for the long term.
Pembina Pipeline stock
Pembina Pipeline (TSX: PPL) is not a stock you own for big capital gains. However, if you want a stable business model and an attractive dividend, it is a good pick.
Pembina has an integrated network of energy infrastructure assets across Western Canada. It provides options for Canadian energy producers to get their products to market. It offers collection and transmission pipelines, propane gas terminals, midstream/natural gas processing plants, and storage facilities.
Pembina has a thoughtful management team, a sector-leading balance sheet, and opportunities to grow (from LNG and infrastructure expansion). Pembina stock yields 5.25% today. It has been steadily increasing its dividend by a low single digit rate in the past few years.
Fortis stock
Fortis (TSX: FTS) has long been a safe-haven dividend stock for Canadian investors when times get rough. The company is built for safety. It operates 10 transmission/distribution utilities across North America. Almost 100% of its operations are regulated.
Fortis is not growing quickly. However, its 5-6% projected annual growth rate should be very predictable. The company has a very prudent management team and a strong balance sheet.
Fortis has a record of 51 years of annual dividend per share growth. It yields 3.7% right now.
First Capital REIT
Another safe stock for income is First Capital Real Estate Investment Trust (TSX: FCR.UN). It operates 138 urban-focused, grocery-anchored properties across Canada. It has some of the best-located retail properties in the country.
If we are thinking about a potential recession, First Cap should perform resiliently. Most of its tenants provide essential services (like grocery, pharmacy, medical, and banking). As a result, the REIT has 97% occupancy, and it is enjoying mid-single-digit rental rate growth.
The REIT has a tonne of land and property assets that are not fully appreciated by the market. It trades at a substantial discount to its private market value.
First Cap yields 5.5% right now. If you want an attractive, safe dividend that is also paid monthly, First Cap is an interesting stock to buy now.
