There are many potential headwinds that could make 2020 a difficult year for investors. From political uncertainty in the U.S. to stocks trading at their highs and a possible recession on the horizon, investors should be looking to protect their portfolios from a large market correction that, at this point, appears inevitable.
It’s more important than ever to be picky when deciding on which stock(s) to invest in, as many could have underwhelming performances in 2020.
Below are two stocks that are safe long-term investments that investors should consider adding to their portfolios today to not only earn a dividend but to add some stability as well.
Fortis (TSX:FTS)(NYSE:FTS) is one of the top stocks on the TSX and it’s an ideal choice for all types of investors, as it offers growth, dividends, and is a good value buy as well. With the stock trading at 15 times earnings and just 1.5 times its book value, it hits a lot of the tickmarks for value investors. It also pays a dividend that yields 3.5% annually. That recurring income can help go a long way for investors if the markets aren’t doing too well, as it can give your portfolio’s returns a boost in a less-than-stellar year.
Another reason why Fortis is a good investment to hold during a downturn is, the utility stock can be resilient to a market crash or economic downturn. Since it offers consumers an essential service and one that can’t easily be forgone, investors can have peace of mind in knowing that even if the economy isn’t doing well, Fortis will likely continue to generate sales and post a profit.
It’s a low-volatility stock that has typically outperformed the TSX. Over the past five years, Fortis stock has risen 37%, while the TSX has climbed just 19%. The dividend income earned on top of that is just gravy for investors.
Whether you’re looking at the short term or the long term, Fortis is a stock that you should consider putting in your portfolio, if for no other reason than the dividend growth.
Waste Connections (TSX:WCN)(NYSE:WCN) is another recession-proof stock that investors can add to their portfolios to help insulate themselves from a potential market crash. While the stock isn’t nearly as cheap as Fortis is, it too offers consumers an essential service, and that can make it an appealing investment option for investors.
Although the stock offers a more modest 0.8% dividend yield, it’s more than made up for that with the capital appreciation it has generated for investors over the years. In five years, the stock has soared more than 140%, eclipsing both Fortis and the TSX during that time.
The company has consistently posted a profit in each of the past three years, and it’s also been generating a lot of free cash flow, with more than US$900 million being brought in over the trailing 12 months. Having lots of cash is the key to flexibility, and it can allow Waste Connections to pursue acquisitions and other growth strategies that cash-strapped companies wouldn’t be able to take advantage of. And that can be crucial during a downturn in the economy.
Fool contributor David Jagielski has no position in any of the stocks mentioned.
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