Latest news with #defensivestocks
Yahoo
14-05-2025
- Business
- Yahoo
The Smartest Defensive Stock to Buy With $3,300 Right Now
Written by Sneha Nahata at The Motley Fool Canada In times of market turbulence, when headlines about tariffs and global economic uncertainty dominate investor sentiment, shielding your portfolio from sharp declines is a smart strategy. One of the most effective ways to navigate such volatility is by turning to fundamentally strong defensive stocks—companies whose products and services remain essential regardless of economic conditions. Sectors like consumer staples and utilities are top examples of defensive bets. These companies offer goods and services people consistently need, such as groceries, household products, and electricity. Because demand for these essentials remains relatively stable even during economic downturns, companies in these sectors tend to deliver steady revenues and maintain resilient stock prices. This makes them attractive havens when broader markets experience turbulence. For Canadian investors looking to protect their capital, here is the smartest defensive TSX stock to buy with $3,300 right now. The TSX has several high-quality defensive stocks, such as Loblaw in the consumer space and Fortis in the utility sector. However, if you're searching for a stock that combines stability with solid growth potential and reliable dividends, Hydro One (TSX:H) stands out as the smartest defensive stock. Hydro One is a leading electricity transmission and distribution company with a dominant presence in Ontario. Unlike many utilities exposed to the ups and downs of commodity prices, Hydro One focuses on power transmission and distribution. This insulates its operations from the volatility of energy markets, ensuring more predictable earnings. Adding to its appeal, Hydro One operates in a rate-regulated environment. This regulatory framework provides visibility into future revenues and cash flows, enabling it to generate low-risk earnings regardless of broader market fluctuations. Despite being a defensive stock, Hydro One has delivered impressive returns. So far this year, its stock price is up over 16%, and over the past five years, it has surged by more than 134%. That translates to an impressive compound annual growth rate (CAGR) of 18.5%, outpacing the broader TSX Index. Moreover, the company has been consistently rewarding its shareholders with growing dividends. Over the last eight years, Hydro One has increased its dividend by a CAGR of at least 5%, reflecting its commitment to returning capital to investors while maintaining a sustainable payout ratio. Its defensive business, regular dividend payouts, and solid growth prospects make it a compelling investment in all market scenarios. Looking ahead, Hydro One's growth story is far from over. The company has a strong balance sheet, which positions it well to capitalize on opportunities ahead. Importantly, it doesn't need to raise external equity to fund its planned growth initiatives. Its organic growth strategy is well-supported by internally generated cash flows and a growing rate base. Hydro One expects its rate base to expand at a CAGR of 6% through 2027. This growth is projected to translate into annual earnings increases of 6–8% over the same period. Naturally, this earnings growth supports further dividend hikes, with management targeting an annual growth of about 6%. Moreover, structural trends like the electrification of commercial buildings and vehicles, population growth, and the rising demand for data centres are set to drive electricity consumption higher. Hydro One's infrastructure is well-positioned to benefit from these macroeconomic tailwinds in the long term. Currently, Hydro One pays an annualized dividend of $1.3324 per share. It aims to maintain a payout ratio between 70% and 80% of earnings. Hydro One has ample room to continue increasing its dividend with its expanding rate base, ongoing operational efficiencies, and solid growth potential. Hydro One is a smart choice for investors seeking a reliable, long-term holding with consistent dividends and capital appreciation potential that could continue to outperform the TSX in the years ahead and provide stability. The post The Smartest Defensive Stock to Buy With $3,300 Right Now appeared first on The Motley Fool Canada. Before you buy stock in Hydro One Limited, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Hydro One Limited wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,345.77!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*. See the Top Stocks * Returns as of 4/21/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
09-05-2025
- Business
- Globe and Mail
This money manager used the April downturn to buy defensive stocks
Money manager Kevin Burkett has been using the recent market downturn to pick up a few stocks he thinks will not only weather the current economic storm but also become long-term winners in his clients' portfolios. 'We look for companies that not only generate sustainable returns on capital, but also have competitive advantages that allow them to thrive across market cycles,' says Mr. Burkett, partner and portfolio manager at Victoria-based Burkett Asset Management Ltd., which oversees about $430-million in assets. His team became more defensive last fall, increasing its fixed-income holdings. In recent weeks, as the tariff war started to roil markets and valuations came down, Mr. Burkett and his team started to increase equities holdings, buying defensive stocks in sectors such as utilities and consumer staples. The firm's balanced portfolio, which includes an approximately 60-40 split of stocks and bonds, was up 9.3 per cent over the past 12 months. Its three-year annualized return was 8.2 per cent, while its five-year annualized return was 11.4 per cent. The performance is based on total returns, gross of fees as of March 31. (Fees range from 0.40 per cent to 1.25 per cent depending on the size of a client's portfolio.) The Globe spoke with Mr. Burkett recently about what he's been buying and selling: Name three stocks you own today and why. Stella Jones Inc. SJT-T, the Montreal-based manufacturer of pressure-treated wood products such as utility poles and railway ties, is a company we bought in late April at an average price of $67.11 a share. We like that its customers, such as railways, telecom and electrical companies, are stable businesses largely independent of economic swings. This is a business we've owned before, but sold in the middle of 2023 after a strong run-up. It's an example of a solid company we've decided to buy back, given its recent drop. Enbridge Inc. ENB-T, the Calgary-based pipeline company, is a stock we bought in late February for $61.24 a share. We tend to trade between Enbridge and Pembina Pipeline Corp. We think Enbridge is best positioned to deliver stable growth through the current business cycle. It operates long-term, fee-based contracts, which lowers cash flow sensitivity to commodity price fluctuations. When you think about the impact of energy tariffs, it comes mostly at the cost of the shipper, so we don't see exposure in pipelines to tariffs on cross-border energy flows. That's a nice feature, too: Enbridge's footprint across North America offers a competitive advantage. Bunzl PLC BZLFY, is a British company that sells food packaging, personal protection and safety equipment to customers across industries such as health care, construction, supermarkets, retail and offices. It has an extensive North American business as well. We originally bought it in late December and again in April. Our average cost is $20.05 a share. It's a stable, conservative business and a great defensive company in a macroeconomic backdrop like we're in now. Name a stock you sold recently. Andlauer Healthcare Group Inc. AND-T, a logistics company in the health care industry, is a stock we sold after it recently announced it was being taken over by United Parcel Service Inc. UPS-N for $55 a share. We bought the stock in February and March for an average price of $43.50 a share. We liked that it had a stable customer base in the health care field. It's also defensive, given the aging population, increased retail drug purchases and strong moat given the strict regulations around pharmaceutical transportation in Canada. It has also been making acquisitions in the U.S. While we were lucky with the quick stock appreciation after the UPS acquisition, we were also a bit disappointed. We wanted to own it for a longer period of time and hoped it would do better than the UPS acquisition price. We sold our shares on April 24 for $53.42 each. We decided not to wait until the deal closed so we could put the money into another stock. This interview has been edited and condensed.
