There’s no question that when the stock market starts to crash, and share prices are falling rapidly across the board, it can be unsettling. At the same time, though, stock market crashes can create significant buying opportunities. Furthermore, not all stocks are impacted equally when markets sell off.
When the economy worsens, many stocks tank considerably because their earnings are impacted significantly. However, some stocks barely budge, or even look better, because what they do is essential, and investors know how reliable these companies are.
No matter how the economy is performing, people will always need power, transport, pipelines, and connectivity, making essential businesses some of the best and most reliable stocks to buy and hold for the long haul.
That’s why, if I had to pick just two stocks I’d happily hold through any crash, they’d be Brookfield Infrastructure Partners (TSX:BIP.UN) and Enbridge (TSX:ENB).
Neither of these stocks is a flashy, high-potential growth stock that could double overnight. Instead, they are reliable and robust infrastructure companies that provide essential services and therefore generate predictable cash flows, making them ultra-reliable passive-income generators.
That’s why they aren’t just high-quality businesses to buy and hold for the long haul; they’re the kind of holdings that give you peace of mind when headlines scream recession or volatility spikes.
When it comes to finding stocks that you can confidently hold through a market crash, it’s essential to find businesses that are essential, well diversified and have strong balance sheets. That’s why Brookfield Infrastructure is one of the best; it ticks all three boxes.
First off, it owns and operates assets that provide essential services such as electricity and gas distribution, transport networks including rails, ports, and toll roads, pipelines and energy storage assets, as well as cell towers and data centres tied to AI demand.
Plus, in addition to the essential services it provides, another reason Brookfield is so crash-resistant is that most of its revenue comes from regulated or long-term contracted sources. Furthermore, roughly 75% of those contracts are inflation-linked, so cash flows tend to rise over time even if prices go up. And on top of everything else, the business is diversified all across the world.
As much as Brookfield’s globally diversified portfolio of essential infrastructure assets can give you the confidence to own it through a stock market crash, the real reason why it’s one of the best stocks to buy and hold for years is its consistency and long-term growth potential.
For years, management has proven it can continue to recycle capital, selling off more mature assets at premium valuations and then reinvesting the proceeds into higher-growth opportunities.
That’s how Brookfield continues to increase the cash flow its business generates, without loading up on too much debt. It also allows Brookfield to continue growing its distribution every year, with the company targeting annual dividend increases of 5% to 9%.
In addition to Brookfield Infrastructure, Enbridge is another ultra-reliable stock you can have confidence holding through a market crash for many of the same reasons.
In fact, the $153 billion stock is one of Canada’s most important companies because it transports 30% of the oil produced in North America and 20% of the natural gas consumed in the United States. That’s not all, though. Enbridge also has a significant utility business and a rapidly growing renewable energy segment.
Another reason it’s so reliable is that, like Brookfield, the majority of Enbridge’s sales come from regulated or contracted revenues, which keep cash flows stable and predictable. That not only makes it significantly more reliable, causing the stock to hold up better during a market crash, but it’s also what makes Enbridge one of the best and most reliable dividend stocks on the market.
That predictable revenue not only allows it to increase its dividend every year, which it’s done for more than three straight decades, but it also allows Enbridge to pay an attractive yield, which currently sits at more than 5.5%.
So, if you’re looking for a reliable stock to buy now that you can have confidence holding through a market crash, Enbridge is undoubtedly one of the best choices Canadian investors have.
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Fool contributor Daniel Da Costa has positions in Brookfield Infrastructure Partners and Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Enbridge. The Motley Fool has a disclosure policy.
