Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Want a Recession-Proof Stock to Buy?

Stock MarketsSep 28, 2021 17:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
Want a Recession-Proof Stock to Buy?

How diversified is your portfolio? Adding one or more defensive stocks to your portfolio isn’t only a solid way to counter volatility. Buying a recession-proof stock, particularly the right ones, can lead to years of solid growth and income generation. This is especially true if you are new to investing.

One such example to consider is Canadian National Railway (TSX:CNR)(NYSE:CNI).

What can a railroad realistically offer in 2021? When we think about a railroad, images of long freight cars stretching into the horizon come to mind. Unfortunately, many of us associate that image with trying to get around the train, instead of what freight that train is hauling.

Canadian National is the largest railroad in Canada, hauling goods across a network that spans coast to coast and down through the U.S. Midwest to the gulf region. Access to the gulf coast is a unique factor that shouldn’t be summarily dismissed. Canadian National is the only railroad on the continent with direct access to three different coastlines.

So, Canadian National is huge. The railroad also hauls a lot of goods. Anything from automotive components, chemicals, crude oil, and grain to raw materials and finished products can be hauled. Collectively, the railroad hauls over $250 billion worth of goods each year to and from ports and storage warehouses across its vast network.

In other words, the necessity of the goods that they haul makes railroads some of the most defensive investments on the market. That’s just one reason why railroads such as Canadian National are often referred to as arterial veins of the North American economy.

This fact alone makes Canadian National an ideal recession-proof stock to add to your portfolio. But that’s not the only reason you should consider Canadian National.

Let’s talk growth: Is there still growth potential? Canadian National recently tried to acquire one of its peer railroads, Kansas City Southern (NYSE:KSU) in a multi-billion-dollar deal. The deal raised concerns with the Surface Transportation Board (STB), which has been very anti-merger since a slew of mergers back in the 90s.

The proposed deal also raised concerns with investors who saw Canadian National as taking on too much debt in the deal. Needless to say, the deal never happened, and Canadian National can now move on to other initiatives.

One of those other initiatives to note is Canadian National’s dividend. The railroad currently offers a quarterly dividend that works out to a yield of 1.66%. While that may not sound like much, particularly when compared to other income stocks, Canadian National’s dividend is very appealing.

Specifically, the stock has provided investors with impressive annual dividend growth going back years. In short, buy it, hold it, and let it grow.

Time to bunker down with a recession-proof stock While no stock is without risk, Canadian National really does shine as an investment during times of volatility. In case you haven’t noticed, both food and fuel prices are steadily creeping up. If the market does indeed tread towards a correction, placing a recession-proof stock like Canadian National (who could see a bump in revenue as a result) could be very helpful.

In my opinion, a small position in Canadian National should be a core holding in every well-diversified portfolio.

The post Want a Recession-Proof Stock to Buy? appeared first on The Motley Fool Canada.

Fool contributor Demetris Afxentiou owns shares of Canadian National Railway. The Motley Fool recommends Canadian National Railway.

This Article Was First Published on The Motley Fool

Want a Recession-Proof Stock to Buy?

Related Articles

Why did the SEC release a report on GameStop?
Why did the SEC release a report on GameStop? By Reuters - Oct 18, 2021

(Corrects paragraph 6 to clarify that Schwab did not restrict buying or selling of GameStop's shares, but that it adjusted margin requirements and restricted certain advanced...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email