3 blue chip stocks you should buy on the downside
The stock market has started to show signs of bear market between July 15 and July 19 as S & P / TSX Composite Index fell 2.27% in a few days, before recovering rapidly. As of July 27, the index is up 2.22% since July 19.
Market volatility is of great concern to equity investors. When the market begins to exhibit this level of volatility, it is ideal for investors to consider holding blue chip dividend paying stocks in their wallets.
Blue-chip stocks are usually not as volatile as hot growth stocks and the payouts these companies provide can make up for your losses. Today I am going to discuss three blue chip stocks that you should consider adding to your portfolio in case the market plunges.
Brookfield Asset Management
Brookfield Asset Management (TSX: BAM.A) (NYSE: BAM) is an alternative asset management company that focuses on assets such as utilities, real estate and infrastructure. The company has generated exceptional returns over the past 26 years. At the time of writing, the stock is trading at $ 63.67 per share and is up 4,061.44%.
Brookfield Asset Management’s earnings have averaged over 15% returns per year since 1995. The TSX has averaged less than 6% over the same period. Given the company’s reputation for consistently outperforming the market for nearly three decades, it could be a viable addition to any investor portfolio.
Fortis (TSX: FTS) (NYSE: FTS) is another high quality blue chip stock that deserves a place in investors’ portfolios. The Canadian Dividend Aristocrat has a 47-year dividend-growing streak, making it one of the best dividend-growing stocks on the TSX right now.
The utility holding company owns and operates several utility companies, providing electricity and gas utilities to approximately 3.4 million customers in Canada, the United States and the Caribbean. The company generates almost all of its turnover from highly regulated and long-term contracted assets. This means that Fortis can earn a predictable income that the management of the company can use to comfortably fund its growing dividends to shareholders.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) (NYSE: BNS) is one of Canada’s leading financial institutions. The Big Six Canadian banks are all considered blue chip stocks, and Scotiabank stock stands out as a Canadian bank stock that could provide its investors with significant returns.
Scotiabank stands out from its peers in the Canadian banking industry because of its exposure to Latin American markets in Chile, Peru, Mexico and Colombia. The developing countries of the Pacific Alliance could provide a major boost to the revenues of the Canadian bank. Economists predict that the growing middle class in the Pacific Alliance could grow rapidly this decade.
Provided the savings realize this potential, Scotiabank shareholders can expect exceptional returns over the next several years.
Despite the economic fallout from the pandemic, the stock market has entered expensive territory relative to historic valuations. While the recent decline in the stock market appears to have abated at the time of writing, the conditions are ripe for a possible slow-down.
It might be a better option to park your capital in more defensive assets that can offer you consistent and reliable returns in volatile market conditions. You can consider investing in Brookfield Asset Management, Fortis and Scotiabank stocks for this purpose.
The post 3 Best Stocks You Should Buy In The Bottom Of The Wave was first posted on The Motley Fool Canada.
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Foolish contributor Adam Othman has no position on any of the stocks mentioned. The Motley Fool owns stocks and recommends Brookfield Asset Management. The Motley Fool recommends BANK OF NOVA SCOTIA, Brookfield Asset Management Inc. CL.A LV and FORTIS INC.