BMO:CC - 3 Defensive TSX Stocks for Lower-Risk Investors
2024-03-20 21:45:00 ET
Finding the right mix of defensive TSX stocks to invest in today can make a huge difference to your portfolio tomorrow. In some cases, those picks today can make the difference between working a few years extra or retiring early.
Here’s a look at some of those defensive TSX stocks for your portfolio.
You can’t get more defensive than Fortis
Fortis ( TSX:FTS ) is a name that most investors should be familiar with. Fortis is one of the largest utility stocks in North America. The company boasts 10 operating regions that blanket parts of Canada, the U.S., and the Caribbean.
Utilities like Fortis are known as some of the most defensive TSX stocks for good reason. They generate a handsome revenue stream that is both recurring and stable. Part of the reason for is that the revenue generated by utilities is backed by long-term regulated contracts. Many times, those contracts can span decades in duration.
In other words, as long as Fortis continues to provide utility service, it generates a recurring revenue stream. And that revenue stream allows the company to invest in growth and pay out a generous dividend .
As of the time of writing, that dividend works out to an appetizing 4.42%, making it one of the better-paying and stable options on the market.
Adding to that appeal is the fact that Fortis has provided investors with annual upticks to that dividend for 50 consecutive years without fail. That’s an incredible amount of stability, and more importantly, a practice that Fortis looks to continue doing.
In short, Fortis is a superb option to add to your portfolio today, well-deserving as one of the defensive TSX stocks to consider.
Prospective investors should also note one more key point. Thanks to its reliable income stream and history of increases, Fortis is a great buy-and-forget stock. Investors not ready to draw on that income can choose to reinvest until needed, allowing it to grow further.
A defensive stock with a growing yield awaits
Railroads are another superb option for investors to consider buying. And when it comes to defensive TSX stocks, Canadian National Railway ( TSX:CNR ) is a superb pick.
Railroads like Canadian National may not seem defensive, but they are some of the most defensive picks on the market. In short, railroads haul a massive amount of goods and materials between warehouses, factories, and ports.
In the case of Canadian National, that can be anything from automotive components, chemicals and finished goods to crude oil, wheat, and raw materials. And in terms of dollar amounts, Canadian National hauls an incredible $250 billion worth of goods across the continent each year.
The defensive appeal of Canadian National is off the scale. It’s not only the largest railroad in Canada but also one of the largest on the continent. More importantly, it’s the only railroad with access to three coasts.
It’s not surprising then why Canadian National is often referred to as part of the arterial veins of the entire North American economy.
Apart from its defensive appeal, Canadian National also boasts a growing dividend. As of the time of writing, the railroad offers a respectable 1.93% yield. That yield is backed by a series of annual or better upticks going back over two decades.
Banking on income and growth
It would be nearly impossible to note defensive TSX stocks to buy without mentioning at least one of Canada’s big banks . And the big bank for investors to consider right now is Bank of Montreal ( TSX:BMO ).
Investors considering BMO should note three key points.
First, the bank has a reliable domestic segment that generates the stable bulk of its revenue.
Second, BMO pays out a very generous dividend. BMO is the oldest of Canada’s big banks, and this means the lender has been paying out dividends longer than anyone else in Canada! That nearly two-century tradition of dividend payments without fail is impressive, and today that yield works out to 4.73%.
And finally, BMO can offer investors handsome growth. The bank completed the acquisition of California-based Bank of the West last year. That deal, which expanded BMO’s presence to 32 state markets, is expected to provide investors years of handsome growth potential.
The post 3 Defensive TSX Stocks for Lower-Risk Investors appeared first on The Motley Fool Canada .
Fool contributor Demetris Afxentiou has positions in Canadian National Railway and Fortis. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy .
2024