No one can predict with certainty when or if a stock market crash is brewing. But with the S&P 500 and Nasdaq Composite with both rising about 50% in a near straight line over the past 12 months, markets in general could be exposed to downside risk. With that in mind and a long-term plan in place, investors might want to position themselves now to absorb a market pullback.
One way to prepare is to accumulate some cash and make a shopping list for the right entry point. It’s a smart approach, but a long-term strategy by definition means staying invested. And with the exact time of the next prolonged downturn unknown, these stocks are good places to invest now. They each include desirable characteristics that help you stay invested during a stock market crash.
Keep the returns coming
In addition to always giving returns on your capital when the market is down, owning dividend paying stocks can help an investor psychologically when a portfolio seems to turn red indefinitely. Enbridge (NYSE: ENB) is a Canadian mid-market energy company that operates oil and gas pipelines, as well as natural gas distribution infrastructure and a growing renewable energy portfolio.
Enbridge is able to deliver a reliable dividend through utility-like cash flows from its contracted and regulated gas transmission, gas distribution and oil pipeline operations. The company expects to be able to increase distributable cash flow per share by 5% to 7% per year per year through 2023.
This should give investors the feeling that the current dividend, which pays around 6.6%, will remain intact during an economic crisis and even continue to grow.
And the company also sees plenty of growth opportunities beyond 2023 across its four business platforms. In addition to liquids pipelines and gas transportation and distribution, Enbridge sees opportunities to expand beyond its current portfolio of 23 onshore and offshore wind farms. The Biden administration has stated a goal of creating 30 gigawatts (GW) of offshore wind capacity in the United States by 2030.
Enbridge already has two large offshore wind projects in France under construction, which the company said in its recent first quarter 2021 earnings call are expected to be operational in 2022 and 2023, respectively. Investing in Enbridge now offers a source of income as well as opportunities for capital growth in the event of a stock market crash and beyond.
A balanced company
The stock of McCormick (NYSE: MKC), the well-known maker of spices, sauces and flavors, has outperformed the total return including dividends of the S&P 500 over the past three years by about 15 percentage points, although its shares have been at the bottom lagged behind in the past year. But McCormick has a balanced business that has helped her continue to grow her income during the pandemic.
McCormick’s business is a balance between consumer brands and commercial catering solutions. For its full 2020 fiscal year ended November 30, 2020, overall sales increased by 5%. The growing trend of home cooking during the pandemic led to a 10% growth in its consumption segment, helping to offset a single-digit drop in the commercial flavor solutions segment, which suffered from closures and restrictions on the market. restaurants.
Now that a recovery is starting to take hold in commercial food markets, McCormick sees strength in both segments. For its first quarter of fiscal 2021, overall sales grew 22%, with positive contributions from both sides of the business. The strengthening of the activity prompted the company to increase its sales outlook for the year 2021 to an expected growth rate of 8% to 10%, and also raised its outlook for operating profit and profit growth. per share.
In addition to paying a dividend for 97 consecutive years, McCormick has also increased his dividend payout each year for the past 35 years, placing him in the elite group of dividend aristocrats.
A recent discount
Another name that has the potential to benefit from the current and expected growth of the renewable energy sector is Brookfield Renewable Partners (NYSE: BEP). In a new report released this month, the International Energy Agency (IEA) said renewables were the only energy source where demand increased in 2020. And renewable capacity additions have increased 45% despite the pandemic.
Looking ahead, the agency says renewables will account for 90% of the expansion of new electric capacity around the world over the next two years. Brookfield’s portfolio includes more than 5,300 power generation facilities comprised of hydroelectric, solar and wind power. Like Enbridge, Brookfield also plans to participate in further growth in offshore wind. In its first quarter post, it offered general information on the offshore segment, stating: âOver the past few years we have been monitoring the offshore wind industry, without investing. But as the technology has grown and matured, we are become more comfortable. “
Investors have the option of owning Brookfield Renewable at a lower price this year. As the global stock market moved away from alternative energy names, Brookfield shares have fallen more than 20% in the past three months. The move also raised the dividend yield to almost 3.5% at the current share price. The pandemic-induced market crash of 2020 did not last long. But demand for energy collapsed because of other aspects of the pandemic. Data from the International Energy Agency shows that renewables have held up and are expected to continue to grow. It should also make Brookfield investors feel good about the next stock market crash.
This article represents the opinion of the writer, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.