Now seems like as good a time as any to start taking some volatility off the table, especially if the latest pullback has you up at night worried that the AI trade might be about to crumble, dragging down the broad market, including the TSX Index, with it as we head into the year’s end. Undoubtedly, playing defence can be a good move, even if it leaves some return on the table come the next big bull run. At the end of the day, it’s all about rotating investments around such that your comfort level can be met in all sorts of market environments.
In this piece, we’ll check in on a trio of low-beta stocks that can help lower the volatility for investors seeking to up their defences before December as the holiday season arrives. Undoubtedly, it’s nice to get hyped about a bounce-back and a Santa rally of sorts, but there’s always a chance that Santa won’t be coming this time of year. And if that’s the case, preparing for choppiness looks to be nothing short of prudent, especially if big tech represents a big chunk of your portfolio.
If you’re a holder of the S&P 500, you might not be aware of how much big tech exposure you have and your vulnerability to a tech-focused sell-off from some sort of sentiment shift, which tends to hurt far more than broader pullbacks.
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Empire Company
Empire Company (TSX: EMP.A) is a low-beta grocer (0.35) with a relatively small market cap (just shy of $12 billion) and a reasonably enticing multiple (17.4 times trailing price-to-earnings (P/E) multiple). The grocer behind such names as Safeway and Sobey’s has done quite well in the past year, gaining just over 28%, topping the gains of the TSX Index.
And while the grocery landscape could be tougher to navigate, as Empire’s top boss, CEO Michael Medline, retires. While it has been a rather choppy ride in recent years, I think it’s the low degree of correlation to the broad markets that makes the name a great addition, especially to a tech-heavy portfolio that’s in need of a rotation or a slight rebalancing.
The 1.7% dividend yield is a nice bonus, but it’s the dividend growth profile that I think is the star of the show, especially given the company’s ability to power through harsh times (think a slowing economy or even stagflation). While Empire isn’t the best-performing grocery stock in the country, it certainly stands out as one of the cheapest, especially after the latest late-summer, early-fall correction.
Quebecor
Quebecor (TSX: QBR.B) is another interesting dividend payer that might have what it takes to rally higher as the market looks to test a correction (or perhaps half of one). The stock has pretty much gone in a straight line higher this November, and it’s looking like what’s troubling the rest of the market is not impacting the premier wireless market share-taker.
Quebecor’s Freedom Mobile is expanding quickly (recently announcing its expansion in the province of Manitoba), and my guess is that there’s more share to take as it stands out as more of a value-oriented carrier, but one that’s still capable of offering a connection that’s solid enough for most Canadians.
I don’t like chasing big upward moves, but the 66% year-to-date gain, I think, is supported by the earnings and the still low 14.7 times trailing P/E. The 2.7% yield is the lowest of the Canadian telecoms, but if you want growth, and perhaps more importantly, dividend growth alongside a low beta (0.52 right here), the stock seems worth nibbling, even at above $52 per share.
