If you’re thinking that the stock market is due for a dip, you’re not alone. If you’ve raised some cash in anticipation of this dip, you’re also not alone.
There are many TSX stocks that I’d like to buy for exposure to their strong businesses and bright futures. But, I’m reluctant to get in at any price. I want to choose my entry point wisely. It’s not an easy exercise because it requires patience and fortitude.
It’s been hard watching these TSX stocks continue to rise the last few months, and knowing that I’m missing out on their dividend yields. But I believe that my patience will pay off.
Berkshire Hathaway: Holding record cash
Warren Buffett’s Berkshire Hathaway is sitting on record cash levels. CEO Greg Abel simply does not like the risk/reward trade-off in the stock market today, and Warren Buffett describes what he sees as a gambling mentality that is rampant in stock market investors at this time.
In Berkshire Hathaway’s case, they are sitting on a record $397 billion in cash. They are waiting for the froth and excess valuations to settle down. Quite simply, they are waiting for the stock market to fall to bring valuations more in line with reality.
I’ve made a short list of stocks that I’ve put on my watchlist. These are the stocks that I’ll buy if and when a market dislocation occurs, and they’re brought down to more attractive valuations. They are large, diversified stocks that have strong balance sheets and predictable financial results. I’m just waiting for them to go on sale.
Brookfield Infrastructure
As a global infrastructure leader, Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) has the benefit of a diversified revenue stream as well as predictable and growing cash flows.
Brookfield owns and operates long-life assets in the utilities, transport, midstream, and data industries across the globe. These industries are essential, and this makes Brookfield well-positioned in the infrastructure space.
This TSX stock continues to trade near all-time highs and it has a very attractive dividend yield of 4.7%. It’s on the top of my list of TSX stocks to buy when the market dips.
Capital Power
Capital Power Corp. (TSX:CPX) is a growth-oriented power producer that focuses on natural gas-fired generation, which involves burning methane to create electricity. This is the cheapest and quickest form of energy, with a booming demand profile.
At this time, CPX stock is yielding a generous 4%. This dividend is supported by strong cash flows, a strong balance sheet, and a growing business. In fact, Capital Power has a variety of opportunities to continue to grow, including re-contracting at higher prices.
This TSX stock is well-positioned to continue to benefit from the unprecedented rise in energy demand that’s expected in the coming years.
Fortis
Finally, Fortis Inc. (TSX:FTS) is another steady and stable utility stock that I’m waiting to buy when markets get rough. This tried-and-true performer is the epitome of stability and reliability – just the right stock to turn to in times of trouble.
In fact, Fortis stock has a 52-year track record of consecutive annual dividend increases. It also has a strong track record of predictable and growing earnings and cash flows. In the last three years, Fortis stock’s annual dividend per share increased at a compound annual growth rate (CAGR) of 6.5% to $3.53. Looking ahead, management is forecasting a 4% to 6% annual dividend growth rate until the year 2030.
Fortis stock is currently yielding a respectable 3.3%.
The bottom line
This list of TSX stocks has the right business and risk fundamentals that make them strong buys in times of market dips due to economic and geopolitical uncertainty. I’m waiting for the right price to step in and buy, and I’m sure that they’re worth the wait.
