Market volatility can suddenly surge when you least expect it, especially after prolonged periods of relative calm. With the broad TSX Index moving higher, with less in the way of choppiness compared to other markets, most notably the S&P south of the border, questions linger as to how much longer the steady ascent can last and whether it’s bound to end in tears at some point down the line. Indeed, it’s virtually impossible to time the market consistently over time.
Instead, it can pay dividends to keep investing gradually over time, regardless of what the one-year chart looks like. Even if the TSX Index is closer to fairly valued or even a tad on the frothier side, you don’t have to buy the broad market. You can pick and choose the individual names that are undervalued, offering a wider margin of safety than the broad baskets, which are pretty much a basket of stocks, with a heavy weighting towards the financials and energy names.
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Fortis
Either way, this piece will have a look at a fantastic dividend payer that, I think, stands to be spared even when the great market rally of 2026 gets hit with an unexpected drawdown. Enter those steady shares of Fortis (TSX: FTS), which look especially interesting after falling just over 5% from its brief peak hit at the back end of July.
Of course, Fortis isn’t an exciting name, and it’s a retiree staple that many conservative investors tend to flock to at the first signs of trouble for the market or the Canadian economy. The 0.43 beta entails less correlation to the rest of the market, which is a good thing when things turn bearish, but, of course, less than ideal when we’re in the midst of a bull market.
In my view, Fortis shares are still a worthy pick-up at a time like this, when all seems well, and analysts are more than willing to raise the bar on their year-end price targets. With the firm posting some okay second-quarter results, investors have treated the modest but still fairly decent results as an opportunity to take profits and rotate funds elsewhere.
Indeed, we seem to be entering a bit more of an environment where the retail crowd is just a bit more willing to take on more risks for a shot at richer rewards. Even as defensive dividend stocks fall out of favour while risk-on returns to glory, I think any dips in a name like Fortis are more of a buying opportunity for investors looking for stability before anything upsets the markets or causes a rotation out of growth and into value.
Shares are starting to look modestly priced again
At 23.0 times trailing price to earnings, Fortis now looks like a decent deal. Though the 3.26% dividend yield is still a tad light compared to the five-year historical average. While time will tell if the latest 5% drop leads to a full-blown correction or something worse, I do think that a wider window to buy could open in this second half, especially as the risk-taking appetite goes into overdrive and investors begin to neglect predictable earnings and dividend growers just like Fortis.
Sure, Fortis is only exciting when the markets are a scary place to invest, but for those seeking a fair price of admission, I think that FTS stands out going into mid-August.
