3 TSX Recession-Proof Dividend Stocks

Investors worried about a potential recession should snatch up dependable dividend stocks like Metro Inc. (TSX:MRU) and others in June.

| More on:

The S&P/TSX Composite Index slipped 31 points to open the month of June. Meanwhile, the Bank of Canada (BoC) moved to increase the benchmark interest rate by 50 basis points, as inflation has continued to confound policymakers. Some analysts and experts are worried that interest rate tightening could severely disrupt the economy going forward. Today, I want to look at three dividend stocks on the TSX that are worth holding in the event of a recession hitting in the first half of this decade. Let’s jump in.

Here’s why investors can trust dividend stocks like Metro in a recession

Metro (TSX:MRU) is a Montreal-based company that operates as a retailer, franchisor, distributor, and manufacturer in the food and pharmaceutical sectors domestically. Grocery and pharmaceutical retail proved very resilient during the 2020 market pullback. Investors can trust these essential services even during a recession. Shares of this dividend stock have climbed 2.9% in 2022 as of close on June 1. The stock is up 18% from the previous year.

Investors got to see Metro’s second-quarter fiscal 2022 earnings on April 21. Its sales increased 1.9% year over year to $4.24 billion. Meanwhile, adjusted net earnings jumped 5.1% to $204 million. Moreover, adjusted diluted earnings per share climbed 7.7% to $0.84.

This dividend stock possesses a favourable price-to-earnings (P/E) ratio of 19. It offers a quarterly dividend of $0.275 per share. That represents a modest 1.5% yield.

This top Canadian utility is a profit machine

We are going to stay on the essential services track with Hydro One (TSX:H), the top utility in Canada’s largest province. Shares of this dividend stock have climbed 7.3% so far this year. Hydro One is up 14% compared to the same period in 2021.

The company released its first-quarter 2022 results on May 5. It delivered total revenues of $2.04 billion — up from $1.81 billion in the previous year. Hydro One benefited from the impacts of the OEB decision in April. Earnings per share (EPS) increased 15% from the prior year to $0.52.

Hydro One possesses a very solid P/E ratio of 21. It last announced a quarterly dividend of $0.28 per share, which represents a 3.1% yield. The company has delivered dividend growth every year since its debut on the TSX.

One more dividend stock you can trust in a recession

Corby Spirit and Wine (TSX:CSW.A) is the third dividend stock I’d look to snatch up and hold in the event of a recession. This stock offers exposure to the alcohol space, which has proven historically resilient in the face of economic turmoil. Indeed, alcohol consumption can sometimes increase in the face of economic turbulence. Corby manufactures, markets, and imports spirits and wines. It owns or represents top brands like Polar Ice Vodka, Ungava Premium Gin, Lot 40 Canadian Whisky, and others.

In Q3 fiscal 2022, the company posted adjusted revenue growth of 4%. Meanwhile, adjusted net earnings were down compared to the previous year. Shares of this dividend stock possesses an attractive P/E ratio of 19. Corby offers a quarterly dividend of $0.24 per share, representing a strong 5.3% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CORBY SPIRIT AND WINE LTD CLASS A.

More on Investing

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

Electricity transmission towers with orange glowing wires against night sky
Investing

Fortis Rose 11% in 90 Days, and it’s Still a Good Stock to Buy Now

Here's why Fortis (TSX:FTS) is among the top dividend stocks I think long-term investors want to own in this current…

Read more »

grow money, wealth build
Investing

1 Canadian Growth Stock Poised to Outperform in 2025

Restaurant Brands International (TSX:QSR) is a top growth stock that also has a massive yield and a depressed P/E multiple…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Valued at a market cap of $55 billion, Imperial Oil pays shareholders a growing dividend yield of 2.4%. Is the…

Read more »

A worker drinks out of a mug in an office.
Investing

Here’s the Average TFSA Balance at Age 34 in Canada

Have you ever wondered how your TFSA stacks up compared to the average Canadian?

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »