3 ‘safe’ shares to ride out the volatility

It’s days like today where it’s better to avoid looking at your portfolio balance – it isn’t nice seeing how much you’ve ‘lost’ on paper in one crushing day.

However, some shares are affected more than others. Afterpay Touch Group Ltd (ASX: APT) may be down 9.4% and WiseTech Global Ltd (ASX: WTC) may be down 9.6%, but not all of the market has been hit as hard.

Some technology shares have been trading on nosebleed valuations, but there could be relative safety with the below three shares:

Propel Funeral Partners Ltd (ASX: PFP)

The second largest funeral business in Australia and New Zealand is only down 1.8% right now. The sad reality is that death will continue to happen (as well as taxes). Propel has an almost-guaranteed level of earnings each year if it can maintain, or grow, its market share.

Propel is looking to grow quickly in the short-term through acquisitions. However, it has long-term organic growth potential because death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.

It’s currently trading at under 20x FY19’s estimated earnings.

Rural Funds Group (ASX: RFF)

The largest ASX-listed farmland landlord is only down 1.2% today. The farms are going to generate exactly the same amount of rent whether share markets are up or down.

It has a good diversification strategy with various farm types including cattle, cotton, almonds, macadamias, vineyards and poultry.

Management confidently predict that the real estate investment trust’s (REIT) distribution will increase by 4% per year for the foreseeable future. This is a pleasing and reassuring projection that should let you sleep easily at night.

It’s currently trading with a FY19 distribution yield of 5%.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

The investment conglomerate has been operating for over a century. Meaning, it has survived two world wars and two large financial recessions – it’s extremely likely to make it through the next downturn too.

Its long-term investment style means it won’t panic on days like today. In-fact, management will probably see it as an opportunity, as Warren Buffett would. Soul Patts is often called the ASX’s version of Berkshire Hathaway.

Soul Patts has been delivering long-term market-beating total returns for a long time. I particularly like that its annual ordinary dividend has increased every year since 2000.

It currently has a grossed-up dividend yield of 3%.

Foolish takeaway

I’m glad I own these three shares in my portfolio. No business is truly ‘safe’ – there’s always risk, but some are less risky. At the current prices I’d go for Propel, then Rural Funds then Soul Patts. I’d love to buy more Soul Patts shares but until the yield excluding franking credits is above 3% again I won’t be adding to my holding.

Another share that exudes defensive characteristics is this top ASX stock which is likely to grow profit even in a downturn.

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Motley Fool contributor Tristan Harrison owns shares of Propel Funeral Partners Ltd, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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