2 Stocks for Stability in Your TFSA

Fortis (TSX:FTS) and another stock worth buying for a TFSA.

Key Points
  • With the TSX up, consider stability stocks Fortis (FTS) and Loblaw (L) to help stabilize portfolios heading into year‑end.
  • Fortis is a low‑beta (~0.35) bond‑proxy dividend grower with steady capital plans, while Loblaw is a defensive‑growth grocer (also ~0.35 beta) positioned to benefit from trade‑down demand and tech‑driven margin gains.

With the TSX Index fresh off three quarters of impressive gains, investors may wonder if it’s worth hanging onto the risk-on names going into year’s end. Indeed, a correction can always punish investors. And with valuations a lot higher than where they stood a year ago, it seems only prudent to ring the register here and there, perhaps to do a bit of tax-loss selling before focus shifts to the holiday season.

Though raising some cash through share sales can make sense if one no longer sees value to be had in a name (the market price has surged way above one’s estimate of its worth), I don’t think that selling based on the vibes of a talking head is all too good an idea.

While a correction call will eventually be right, I think it’s the best move for investors to be prepared for a windier road, rather than seeking to avoid it. If you’re focused on the next seven years and not just the next seven months, holding through volatility and taking advantage of dips along the way seems prudent. At this juncture, I’d be more inclined to give some of the stability stocks a look if you’re looking for some portfolio “shocks” before turbulence has a chance to rock markets again.

In this piece, we’ll quickly go over a pair of names that may just be able to help stabilize your portfolio before the next market upset has a chance to happen.

Piggy bank with word TFSA for tax-free savings accounts.

Source: Getty Images

Fortis

Fortis (TSX: FTS) is a terrific bond proxy, and while shares are getting pricier at new highs just north of $70 per share, I still see plenty of upside in the steady, predictable dividend grower. The beta sits at 0.35, so shares of FTS have a higher-than-average chance of being in the green on a red day for the markets. With growing demand for energy (thanks in part to AI models), perhaps it’s the transmission line plays that stand out as indirect longer-term winners.

With a steady long-term growth plan (five-year capital plan) and the potential to extend such a plan (or get more aggressive with it as rates fall further), I view Fortis as a strong contender to beat bonds over the long haul and most risk-on stocks on the way down. While FTS stock’s long-term gain potential is somewhat limited versus the likes of tech plays, I do like the name as a portfolio stabilizer for those who fear what kind of damage a correction could cause to their TFSA portfolios.

Loblaw

Need something that’s a bit growthier? Loblaw (TSX: L) stands out as a defensive growth play that has a low beta (also at 0.35) that can hold up when things get a bit more turbulent for the stock market. Shares have more than tripled in five years, which isn’t typical performance for a defensive grocer, to say the least, especially one that’s doubled down in low-cost, high-value brands.

As inflation weighs and employment faces new challenges in the new year, my bet is that the local No Frills is going to continue to be packed, as Canadians look to “trade down” from their favourite organic grocers to save a great deal of cash. I have no idea when food inflation will plunge (and stay below) the 3% level. Either way, Loblaw is a name that can do well in spite of an environment that’s less upbeat for consumers. As the firm embraces new tech, like self-driving trucks, I think margins could also get a nice, sustained boost.

Fool contributor Joey Frenette has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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