Invest in Resilient Canadian Stocks Amid Market Volatility

Market volatility poses challenges for investors, making the selection of stable stocks crucial. In Canada, certain stocks have demonstrated resilience, providing a layer of protection against market fluctuations. A “safe” stock is characterized by its ability to maintain profitability during economic downturns and its likelihood of long-term survival.

Identifying Canadian stocks that can weather market storms is essential for investors seeking stability. These stocks typically experience less severe declines during downturns and demonstrate solid growth potential over time. Here are two Canadian stocks that stand out as reliable choices.

Brookfield Asset Management: Growth and Stability

Brookfield Asset Management (TSX:BAM) ranks among the most robust and growth-oriented companies in Canada. Currently trading at approximately $70.74 per share, the stock has seen a decline of over 21% from its 52-week high. It offers a dividend yield near 3.5%, appealing to income-focused investors. Analysts suggest that BAM is trading at a discount of about 13%, indicating a potential upside of around 15% in the near term.

The appeal of Brookfield lies not only in its current valuation but also in its long-term growth strategy. The company aims to increase earnings by about 20% annually over the next five years, a notable target for a firm of its size. This growth trajectory is expected to result in double-digit dividend increases, rewarding long-term shareholders.

As one of the world’s largest alternative asset managers, Brookfield oversees assets exceeding US$1 trillion. With a significant portion classified as fee-bearing capital, the company benefits from steady management fees and performance-based fees. Key global trends, including digitalization, artificial intelligence, and decarbonization, are poised to drive sustained growth across its various platforms, including infrastructure and renewable energy.

Intact Financial: A Defensive Powerhouse

Another strong contender in the realm of safe Canadian stocks is Intact Financial (TSX:IFC), the largest property and casualty insurer in Canada. With operations extending into the U.S., U.K., and Ireland, Intact leverages a diversified and defensive business model. Over the past decade, the firm has consistently delivered superior returns on equity, growing net operating income per share by over 10% annually. This reliability translates into consistent dividend growth, with an impressive compound annual growth rate of 9.7% over the last ten years.

Currently priced around $281 per share, Intact offers a dividend yield of nearly 1.9%. Analysts indicate that the stock is trading at a 12% discount, suggesting a potential upside of almost 14%. Intact’s disciplined underwriting practices, strong balance sheet, and proven ability to navigate various market cycles make it a dependable choice for investors.

For those considering investments in the Canadian market, it is essential to understand that even the safest stocks can be affected by market dynamics. Investors should be prepared to maintain their positions for a minimum of three to five years, allowing time for earnings growth to compound and for the market to recognize inherent value.

The resilience of companies like Brookfield Asset Management and Intact Financial positions them as reliable options for wealth creation, offering both stability and potential income through any market environment.