2 best stocks to buy in a declining market


Image source: Getty Images

Are economic difficulties ahead, as evidenced by the downtrend in the stock market lately? The TSX finished higher than the previous day to start the final quarter of 2021. However, the 20,150.87 close on October 1, 2021 was the fourth consecutive week of losses. Canada’s primary index has declined 3.22% since reaching a record high of 20,821.40 on September 3, 2021.

We have seen continued erosion of market gains since the start of the year. The last time the TSX finished below 20,000 was July 20, 2021. Still, some stocks show resilience in an unpredictable environment.

The Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM) outperforms the overall market, while Emera (TSX: EMA) in the utilities sector is more stable than ever. These are the best stocks to buy if you want income stability in a declining market.

New brand image

Low-risk investors shouldn’t think twice about investing in CIBC today. Bank stock is up 34.99%, the second best performing among the big banks so far in 2021. At $ 142.18 per share, the dividend yield is 4.14%. The fifth bank of Canada’s profit results after three stellar quarters in fiscal 2021. In fiscal 2021, net income even increased by more than 300% compared to the second quarter of fiscal year 2020.

In addition to the impressive growth in net income despite the pandemic, CIBC’s 153-year dividend history makes it a buy-and-hold action. On September 23, 2021, the $ 63.99 billion bank unveiled a new logo. According to management, this is the culmination of CIBC’s vast transformation in recent years.

CIBC President and CEO Victor Dodig said: “Since its founding over 150 years ago, CIBC has strived to deliver exceptional customer experiences, never more so than today. hui as we build a relationship-driven bank for the modern world. The management wants to send a message that the new branding unites the heritage in the future.

Dodig said: “Our renewed focus has been our North Star throughout this time and as we look to the future.” He adds that it’s more important than ever for the brand to capture what banking is today. CIBC has a North American growth platform, a client-centric culture and a forward-looking focus for its stakeholders.

Dividend growth

Emera has high quality utility assets in North America, consisting of seven regulated energy-focused operating companies and two unregulated investments. It is not as old (23 years) as CIBC, but it offers capital protection because the business model is recession resistant.

The $ 14.73 billion electricity company derives 90% of regulated assets, namely electric utilities and gas SDLs. Emera also has an unregulated gas-fired power generation asset in North America. With demand for electricity set to double or triple over the next five years, now is the perfect time to own that stock of utilities.

Current investors have benefited from a gain of nearly 10% since the start of the year. At $ 57.43 per share, the dividend offer is 4.44%. Likewise, dividend growth is on the horizon. With its capital investment plan of $ 7.4 billion (2021 to 2023), management expects the rate base to increase between 7.5% and 8.5% in three years. Therefore, the target of annual dividend growth of 4% to 5% until 2023 is achievable.

Beginning of a bear market

This month could see the end of TSXbull run of 2021. However, investors in CIBC or Emera should feel safe. Both companies are resilient and have experienced serious downturns. They kept investors whole on dividend payments, even in a declining market.


Leave a Reply

Your email address will not be published.