If the latest comments from President Trump and tariffs to be slapped on China have you worried that the much-anticipated correction is about to hit, you’re not alone. Indeed, it’s a jittery time for markets right now, with elevated valuations and tariff risks that may very well escalate to the next level. While it’s too soon to tell if the latest 100% tariff threats on China will cause a repeat of the correction that happened earlier in the year, I still think that investors who aren’t prepared to deal with such volatility may wish to start thinking about rotating into some of the most defensive dividend payers out there.
In this piece, we’ll check in on two reliable stocks with lower betas that might not have as much downside come the next big correction. Indeed, low betas mean low correlations to the broad market and do not guarantee no volatility. Still, if you’re looking to play a bit of defence, the following pair seems worth watching or even buying if you’re a fan of the current price of admission.
Group of friends laughing on a roller coaster ride at the amusement park during sunny day.
Canadian Utilities
Shares of Canadian Utilities (TSX:CU) are worth picking up if you think the market is bound to head south in a hurry. Though it’s impossible to time the next pullback in markets, loftier valuations, AI circular financing concerns, and the latest rise in tariff fears may very well be enough to rotate into a steadier name like Canadian Utilities. The relatively small utility firm has a modest $8 billion market cap and a well-covered 4.7% dividend yield, which looks poised for further growth over time.
Over the past two years, shares have surged a respectable 31%. And while the valuation is a tad on the steep side at 23.8 times trailing price-to-earnings (P/E), I do find the name to offer a far better risk/reward than bonds, which many Canadian investors may be inclined to rotate into at the first signs of volatility. If you’re a young investor with a long-term time horizon, I’d say CU stock is a better bet, especially given the promising technical backdrop, which might provide a pathway to prior highs.
Barrick Gold
Whenever volatility rockets higher on the back of macro risks, gold and the gold miners, such as Barrick Gold (TSX:ABX), tend to be, well, worth their weight in gold. Understandably, shares of ABX and the broad basket of gold miners have been on a meteoric rise this year. And while I wouldn’t chase a parabolic move, I do think that a premier, low-cost miner like Barrick could prove a great buy on dips. The stock has nearly doubled year to date, but the price of admission is still quite modest at 20.6 times trailing P/E.
With a 0.53 beta and the potential to stand tall as markets take a turn lower, I’d look to build a position in the name gradually over the coming year. Of course, there’s a bit of uncertainty at the upper levels, with CEO Mark Bristow departing the company. Either way, I think Barrick in the post-Bristow era is worth sticking with, especially if gold is destined to make a move to US$4,000 per ounce over the medium term.
