Written by Christopher Liew, CFA at The Motley Fool Canada
Global stock markets tanked or crashed at the start of April 2025 when U.S. President Donald Trump announced new tariff policies. There was disbelief among investors because even long-time trading partners like Canada and Mexico were not exempt from Trump’s tariffs.
The Toronto Stock Exchange pulled back in April, then regained steam the following month. Canada’s primary stock market registered three record highs in the first week of June, although the next market cycle doesn’t look pretty. Many economists see a recession in the U.S., and it might drag the Canadian economy along.
If recession is unavoidable, investors need to prepare and implement a strategy focused on capital protection and financial resilience. Assuming you have $10,000 to work around, consider taking positions in two TSX stocks with low-risk profiles. You can ride out the market fluctuations and optimize returns.
Fortis (TSX:FTS) is a must-own stock for all types of investors. This utility stock is one of only two TSX dividend kings. A dividend king is a stock that has had 50 or more consecutive years of dividend increases. The $32.6 billion regulated electric and gas utility company has increased its dividends for 51 straight years.
With its new $26 billion five-year capital plan (2025-2029), management commits to 4% to 6% annual dividend growth through 2029. It projects the mid-year rate base to rise to $53 million by 2029 from $39 billion in 2024 (a 6.5% compound annual growth rate).
Fortis trades at $65.04 per share (+11% year-to-date), while the dividend offer is 3.8%. A $5,000 investment transforms into $47.25 in quarterly passive income. If you don’t collect the dividends but reinvest them, your capital will compound to $7,255.07 (a 45.1% return on investment) in 10 years.
Its President and CEO, David Hutchens, said, “We are off to a strong start in 2025. Our utilities are executing their capital programs while continuing to actively pursue incremental investment opportunities.” Net earnings in Q1 2025 increased 8.7% to $499 million compared to Q1 2024.
The good news for investors is that the U.S. tariffs have had no material financial impact on Fortis in 2025. Moreover, the company see opportunities to expand its electric transmission grid in the U.S. beyond the five-year capital plan.
TELUS (TSX:T), Canada’s second-largest telecommunications company, is the perfect complement to a dividend king. The 5G stock doesn’t wear a crown but boasts 20 consecutive years of dividend hikes. Also, management intends to maintain its semi-annual increases and targets a 3% to 8% annual increase through 2026.
At $22.38 per share (+16.5% year-to-date), the dividend yield is 7.4%. Your $5,000 (half of the $10,000 fund) investment will produce $93 every quarter and compound to $10,450.01 with dividend reinvestment. TELUS plans to invest over $70 billion in the next five years to expand and enhance its network infrastructure and operations across Canada.
Darren Entwistle, President and CEO of TELUS, said the investment transcends traditional connectivity. The bold and future-focused technology investments will be the cornerstone of Canada’s competitiveness on the global stage.
Fortis and TELUS form a formidable combination for income-seekers. The quarterly dividends can serve as a cushion during a recession or an inflationary environment.
The post A $10,000 Strategy for the Next Market Cycle appeared first on The Motley Fool Canada.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Fortis and TELUS. The Motley Fool has a disclosure policy.
2025
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