FTS:CC - These Stocks Are Safe and Steady: They're Also on Sale
2024-07-26 15:30:00 ET
Undoubtedly, Canadian stocks already seem, at least on average, cheaper than the names south of the border. And with the weakening exchange USD/CAD rate, perhaps the latest slip in the TSX is a fine opportunity to pick up some low-cost dividend favourites.
Whenever a specific sector (it’s tech once again!) hits the brakes suddenly, it can pay to invest in “safe and steady” names, many of which stand to hold their own on the worst stock market days.
Further, until inflation does fall closer to 2%, the Bank of Canada may wish to hold off on further cuts. Being too dovish could entail greater risk than being too hawkish, at least in my opinion. If expected cuts for the rest of the year are fewer than expected, the stage may just be set for another one of those brutal corrections.
In this piece, we’ll check out one intriguing Canadian passive-income stock that can help you make it through a potential roller-coaster finish to the year, with the U.S. presidential election up ahead and a number of uncertainties regarding central bank policies.
Tech is getting wrecked: It is time to think about the safe and steady names
Even though it’s tempting to buy the dip in today’s crashing tech names, it’s always a good idea to have a backup plan in case the tech correction turns into a bear market or, worse, a crash. But if you’re diversified across sectors, geographies, and market caps, I’d argue you don’t need to hit the panic button over any industry- or cap-based rotations or corrections.
At the end of the day, volatility is a part of the price you pay for betting on risky assets.
As such, for new investors , I believe it is prudent to keep safe, simple, and boring names alongside your high-growth plays because not every day can be an up day, and not every market can be in full-on bull mode.
Fortis stock: A utility bargain right now!
Right now, Fortis ( TSX:FTS ) stock looks like a market bargain hiding in plain sight after fluctuating around a wide range ($51-56) over the past year. Still down 13% from its all-time high and up only 8% over the past five years, shares of FTS seem long forgotten about by investors who’d rather have a front-row seat to the growth trade. As growth hype dies down and investors look to “safe and steady” types of names, I view Fortis as a potential winner.
It’s a stable utility with a 4.18% dividend yield and a historically low 18.0 times trailing price-to-earnings (P/E) multiple. Moreover, the company is on track to raise its dividend by at least 4% every year over the foreseeable future, thanks in part to new projects, many of which will generate juicy cash flow.
Typically, you’ve got to pay a premium for such predictable (albeit modest) growth. But thanks to higher rates, you’re paying more of a discount on the name. As rates retreat in the coming quarters, perhaps FTS stock may be able to get enough of a boost to make it back above the $60 level.
The post These Stocks Are Safe and Steady: They’re Also on Sale appeared first on The Motley Fool Canada .
Fool contributor Joey Frenette has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy .
2024