The market is full of volatility right now, and I’m not just referring to the slew of tariffs announced this week that shook world markets. It’s during these times of extreme volatility that investors need to be smart when picking a Canadian stock to buy.
In my opinion, the smartest Canadian stock to buy is Fortis (TSX:FTS) and here’s a look at why the stock is a must-have right now.
First, a disclaimer
Markets are in a tizzy over the tariff announcements made this week. The impact of these far-reaching changes to global trade is yet to be determined, but investors need to keep in mind a few key points.
First, market volatility, similar to what we’re seeing this week, is a normal part of the investment cycle. Markets rise and fall, but over longer periods of time, stability will prevail.
Speaking of markets, the aptly named fear and greed index, which is a measure of the market sentiment, is now firmly in the extreme fear camp. By way of comparison, last year, the index was leaning toward greed.
What does this mean for investors? To quote from Warren Buffett, “Be fearful when others are greedy and greedy when others are fearful.”
Given the market uncertainty, it may be a good time to be a little greedy with Fortis, which is one of, if not the smartest Canadian stock to buy right now.
Meet Fortis
Fortis is one of the largest utility stocks on the market. The utility stock boasts 10 operating regions that blanket the United States, Canada and parts of the Caribbean. This level of coverage makes Fortis a defensive option to consider for any portfolio.
What bolsters that defensive appeal further is the lucrative business model that utilities like Fortis adhere to.
As a utility, Fortis provides a necessary service. That utility service is, in turn, bound by long-term, regulated contracts that span decades. Those contracts guarantee a stable and recurring source of revenue for the company.
This means that as long as Fortis continues to provide that utility service, it will generate a healthy revenue stream. And that revenue stream allows Fortis to invest in future growth and pay out a very handsome dividend.
What else can Fortis provide?
There’s another reason why Fortis is the smartest Canadian stock to buy right now. That reason is the company’s quarterly dividend. As of the time of writing, that dividend works out to a respectable 3.72%.
This means that investors of this smartest Canadian stock can expect to generate an income of just under $750.00 from a $20,000 investment.
Keep in mind that prospective long-term investors can reinvest those dividends, allowing any future income to continue growing.
And that’s not even the best part.
Fortis has provided investors with annual upticks to that dividend for over 50 consecutive years without fail. That impressive streak makes Fortis one of only two Dividend Kings in Canada.
It also means that long-term investors, as well as those seeking solace from market volatility, can now look at Fortis as a stellar buy-and-forget candidate for any portfolio.
Will you buy the smartest Canadian stock?
No stock, even the most defensive, is without some risk, and that includes Fortis. Fortunately, in the case of Fortis, the company operates a very defensive business model that generates ample revenue and pays a handsome dividend.
That defensive appeal can help weather any turbulent storm, such as the one we are currently seeing in the market. Investors should note that volatility is a normal part of the market cycle.
In my opinion, Fortis is the smartest Canadian stock to buy right now and should be a core holding in any well-diversified portfolio.