August is quickly approaching. After a great first half of 2021, markets saw signs of volatility return in July. This has prompted many investors to seek out defensive investments. This raises questions about the rest of the year and the need to seek out defensive investments. Fortunately, the market provides. Here are some superb summer stock buys to consider this August.
Option #1: The defensive bank stock
Canada’s banks, particularly the Big Five, are notoriously great, albeit similar investments. They offer handsome dividends spanning back decades and solid growth prospects, and they boast reliable, defensive branch networks. But which of Canada’s banks should be included as one of the best summer stock buys?
That honour goes to Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), and here’s why.
Scotiabank differs from its peers in that it has chosen not to focus growth efforts on the U.S. market. Instead, Scotiabank has focused on Latin American markets. Specifically, the bank has established a presence in Mexico, Columbia, Peru, and Chile. Those nations are part of a trade bloc known as the Pacific Alliance. The alliance is tasked with increasing trade and reducing tariffs between its member states.
As a prominent banking option within the bloc, Scotiabank has become a familiar option for investment. This has led to impressive returns during earnings season and a growth path that can be mapped out for years.
In terms of income, Bank of Nova Scotia offers a quarterly dividend. Scotiabank’s yield works out to a handsome 4.58%, surpassing many of its peers.
Option #2: The stable telecom stock
Telecoms represent another great long-term option for any portfolio. For this list of summer stock buys, the telecom to consider is BCE (TSX:BCE)(NYSE:BCE).
BCE is a behemoth in every sense. The telecom blankets Canada in coverage, offering wireless, wireline, TV, and internet service. If that weren’t enough, the company also has a sizable media segment that includes dozens of TV and radio stations.
Specifically, BCE’s wireless segment is what should excite investors. The need for wireless connections has only grown in the past decade. In fact, wireless devices are now considered must-have extensions of our digital selves. But how does that help BCE?
The growing need for the functionality provided by those devices is providing BCE with a steady stream of new customers. Additionally, new devices are constantly being added to the market. This provides additional revenue opportunities to BCE in the form of device sales and higher data consumption.
In short, the wireless segment is only just beginning to show its full potential in terms of revenue.
If that weren’t enough, BCE also provides a handsome quarterly dividend. The current yield works out to an impressive 5.67%, which is higher than its other big telecom peers. That factor alone may be reason enough to consider BCE as one of the better summer stock buys.
Option #3: The growth-focused renewable energy stock
Renewable energy investments have massive long-term potential. Governments are increasingly transitioning off fossil fuels and moving to renewables. This leaves traditional utilities stuck with massive long-term transitional costs.
Fortunately, for renewable stocks like TransAlta Renewables (TSX:RNW), that opportunity is now. TransAlta boasts a well-diversified portfolio of facilities that is located across Canada, the U.S., and Australia. Those facilities encompass multiple technologies such as wind, solar, and hydro.
Even better, TransAlta adheres to the stable and recurring business model that traditional utilities follow. This means that TransAlta generates a stable revenue stream, which gets passed on to investors as a dividend.
That dividend currently works out to a tasty 4.33% yield. Oh, and unlike most companies, TransAlta pays out that dividend on a monthly basis.
Summer stock buys for your portfolio
As a reminder, no stock is without risk. To counter that volatility, diversifying your portfolio from different market segments is always a solid way to proceed. To that end, the three summer stock buys noted above accomplish that objective. They all offer a handsome income, have some defensive protection, and boast long-term growth.
In short, buy them, hold them, and watch your portfolio grow.