Safe Haven Stocks For A Turbulent Market

Mar. 6.12 | About: TELUS Corporation (TU)

Anyone who thought good times in the Canadian stock market were just beginning was in for a rude awakening the past two days.

The reason? We are dependent on the performance of major economies outside our borders and we shouldn't forget that.

Sunday's announcement that the Chinese are targeting only 7.5% growth for 2012 versus 9.2% in 2011 was the latest negative news, taking over from the Greek bailout negotiations as the top story.

The S&P/TSX composite index was down 224 at 12,299 at 10:30 a.m. today. Yesterday the Canadian bellwether lost 119 points.

April WTI is down $1.66 at $105.66 and March Gold is down $33 at $1,670.

The DJIA is down 170 points at 12,792 and the S&P 500 is at 1344.58 down 19.75.

As everyone knows, or should know, the Canadian market has many companies highly dependent on commodity prices and volumes which these days are dictated by changing Chinese demand. For example, March copper futures are down 10 cents or 2.6% to $3.75 currently and off 20 cents total, mainly on the negative Chinese news.

Lower Chinese demand for commodities means our main energy, metals, gold, fertilizer and even lumber stocks decline.

Near the top of the large-cap stock S&P/TSX 60 index in influence are Suncor (No. 4), Barrick Gold (No. 5), Canadian Natural Resources (No. 6), Goldcorp (No. 7), PotashCorp (No. 8) and even Canadian National Railway (No. 10) which provides transport for commodities.

What I have been doing during this downturn?

I've been cashing in some nice profits on Telus (NYSE:TU) which goes "ex" dividend tomorrow.

Nice to take some profits on a down day, eh?

Next time you bump into someone with their head buried in their smart phone, or if your teenager asks you to buy them a smart phone for their birthday, you should run out and buy some of the three leading telecoms that provide these services. Telus, BCE (NYSE:BCE) and Rogers (NYSE:RCI).

These are non-commodity safe haven stocks that are not dependent on bad news about lower economic growth from our trading partners. Other safe haven stocks that are up today in a sea of red: Royal Bank (NYSE:RY) and Tim Horton's (THI).

I like to buy safe haven stocks only after an earnings announcement (but not over the date in case of disappointment) and a few weeks before the "ex" dividend date for the positive support the impending payment provides.

My strategy discussed in previous articles is to sell half my position on the typical strength that arrives as the "ex" dividend approaches and let the other half receive the dividend, thereby spreading price volatility.

Stocks that are buyable with high yields and ex dividend days coming up are BCE at $41.18 CDN yielding 5.27% which goes "ex" 54.25 cents on March 13 and CIBC (NYSE:CM) at $76.22 CDN yielding 4.72%, but only upon and after a satisfactory Q1 earnings release from the bank, due on Thursday. CM is expected to report $1.95 per share, with a prospective dividend of 90 cents going "ex" around March 22.

Disclosure: I am long TU, BCE, RY, CM.