- The experience of retiring during a recession could be bad if you don't plan your investments.
- The likelihood of a recession has increased recently amid rising inflation.
- The Bank of Canada is expected to continue rising interest rates.
The likelihood of a recession has increased recently as rising borrowing prices and inflation are straining the world economy. The possibility of slower growth could affect stock values.
The experience of retiring during a recession could be bad if you don't plan your investments properly. Many people lost most of their life savings during the 2008 Financial Crisis as the stock market plummeted by 50 per cent and erased ten years of growth.
This could be a great time to take the plunge if you consider diversifying your portfolio. An undervalued stock market has appealing valuations. However, investors must be vigilant, avoid value traps, and choose firms with robust business models.
Here are five stocks that you could consider exploring in case you end up retiring during a recession:
AltaGas Ltd. (TSX:ALA)
The utility business and the midstream business are two separate divisions of AltaGas. The utility industry is considered to be a safe and reliable industry by some analysts.
Looking ahead, AltaGas might withstand the pressure from deflationary influences. The company announced on July 5 that it is advancing its global export strategy by acquiring the remaining Petrogas stake.
In the first quarter, AltaGas' financial results were strong as its utilities segment's normalized EBITDA grew by 10 per cent year-over-year (YoY). Meanwhile, the net income applicable to shareholders increased to $357 million in Q1 2022 from $337 million in Q1 2021.
The ALA stock pays frequent dividends, and its dividend yield was 3.9 per cent at the time of writing.
Toronto-Dominion Bank (TSX:TD)
One of the biggest and most successful banks in Canada is Toronto-Dominion Bank. The stock of TD Bank has declined significantly over the last few weeks, but that doesn't mean that it is not worth exploring.
Banks are indeed susceptible to economic downturns. However, banks benefit greatly from higher interest rates as well. Given TD Bank's dominant position and history of enduring numerous difficult situations, investors might keep an eye on the TD stock.
On Tuesday, the TD stock was down by 1.2 per cent, closing at C$ 80.83 per share. The bank is backed by its strong financials and announced a dividend of C$ 0.89 per share, payable on July 31.
Alimentation Couche-Tard Inc. (TSX:ATD)
Convenience store chain Alimentation Couche-Tard (TSX:ATD) seems to have mastered the art of mergers and acquisitions. The company has continued to expand its business operations over the years through M&A. The balance sheet of Alimentation Couche-Tard is exceptionally strong, and it has enough cash on hand to handle the impending slump.
In Q4 2022, the company's net earnings amounted to US$ 477.7 million and its total merchandise and service revenues stood at US$ 3.8 billion, up by 1 per cent YoY.
Since the start of the fiscal 2022 year, Alimentation has purchased four company-operated stores, bringing its total number to 74.
Dollarama Inc. (TSX:DOL)
Consumers' spending patterns fluctuate with the state of the economy. Families turn to low-cost discount businesses to stay inside their budgets as living expenses rise and income levels drop. That's positive news for Dollarama and other dollar stores.
In Q1 2023, Dollarama's sales grew 12.4 per cent YoY to C$ 1,072.9 million. Meanwhile, the comparable store sales jumped 7.3 per cent YoY.
The retailer had announced a dividend of C$ 0.055 per share, which would be payable on August 5, 2022.
TELUS Corporation (TSX:T)
Another excellent defensive dividend stock to add to a retirement portfolio is TELUS. TELUS seems to have the authority to boost prices to cover rising expenses, which is crucial in a rising inflation setting. The company is backed by its financials and could sustain itself during times of uncertainty.
In Q1 2022, the company's operating revenues were C$ 4,256 million, up from C$ 4,022 million in Q1 2021.
Please note, the above content constitutes a very preliminary observation or view based on digital trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.