Cautious investors know that it’s not just about punching your ticket to a stock that has the most promise of big gains over the near term. Indeed, trading hot stocks can certainly be thrilling, but once momentum turns and markets begin to show some signs of slowing down, long-term investors should have the types of core names that can help stabilize the portfolio when the stock market “ride” goes over a few rough patches. Indeed, the market won’t always provide investors with a smooth, paved uphill ride. Sometimes, there’s a pothole or two in the road alongside a few cracks in the asphalt.
Other times, you’ll need to go over a dirt road that’s full of stones and other huge dips. In any case, it’s up to investors to be ready to ride out such turbulent times so that one isn’t inclined to jump off the ride, perhaps right before things start to improve for the better. With the broad TSX Index staring at new all-time highs once again, I think pivoting towards some of the market’s safer names could be a wise move, especially if President Trump starts getting more aggressive with tariffs again. Indeed, maybe Liberation Day won’t be the scariest day of the year on the front of tariffs.
With Trump planning to impose 25% tariffs on Japan and South Korea and new tariffs on other nations that could surge 40%, perhaps it wouldn’t be too out of the ordinary to expect another correction and maybe even a bear market at some point over the next 12 months. In any case, let’s check in on one of the top names that can help investors sleep like babies when the market gets a bit more volatile.
Fortis
Enter shares of Fortis (TSX:FTS), one of the steadiest utility plays to help form the defensive part of your TFSA (Tax-Free Savings Account), FHSA (First Home Savings Account), or even your non-registered account (one that’s subject to taxes). Indeed, Fortis can be a real rock for your portfolio when the calls for a painful 10% correction grow a bit louder. The stock hasn’t been the biggest gainer in the past five years, with big swings in both directions and a very modest 23% gain in the past five years.
Despite the wild fluctuations experienced in the past couple of years, though, the dividend (currently yielding 3.78%) and the steady growth pace (think mid-single-digits) remain a top reason to stick with the name as shares begin to wake up again. So far this year, FTS stock has been heating up, now up over 7% year to date. With a mild 19.34 times trailing price-to-earnings (P/E) multiple and a 0.34 beta, which entails less correlation to the rest of the market, Fortis stock seems like one of the “boring” names to stick with in case the TSX is in for more tariff turbulence or something else that’ll rattle markets in the second half now that valuations are quite a bit higher than just six months ago.
With a strong first quarter in the books and currency tailwinds riding behind the firm, I’d not sleep on the name after its latest 7% tumble from recent highs. It’s a bargain whose success, I believe, depends less on the state of the economy and how investors feel about the broad market.
