Investing in stocks carries inherent risks, making it impossible to find one that is 100% safe. Nevertheless, certain stocks exhibit a higher degree of stability and lower volatility, thus providing more security to your investment portfolio. Additionally, these stocks have the potential to generate decent capital gains over the long run. Furthermore, as these companies are typically well-established with strong earnings base, they can enhance shareholders’ returns by distributing regular dividends and repurchasing shares.
With this backdrop, let’s delve into three Canadian stocks that are fundamentally strong, relatively safe, and offer regular income.
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Dollarama
Dollarama (TSX:DOL) is a perfect stock for investors looking for safety, growth, and income. The retailer owns a defensive business. Moreover, it can grow traffic and earnings, regardless of market conditions. Further, its growing earnings base allows it to return substantial cash to its shareholders through higher dividend payments.
Dollarama provides a diverse selection of items at various low, fixed price points. This makes it a favoured destination for budget-conscious shoppers. With a growing customer base, direct sourcing, an extensive network of stores, and a focus on operational efficiency, this value-driven retailer consistently achieves impressive double-digit increases in both sales and earnings. For instance, Dollarama’s revenue surged by more than 20% in the first half of the current fiscal year. At the same time, its earnings per share (EPS) expanded by approximately 28%.
Thanks to its rapid growth, its stock has gained over 111% in the past three years. This reflects a CAGR (compound annual growth rate) of approximately 28%. Further, it has consistently increased its dividends for years. Overall, Dollarama’s value proposition, increasing customer base, large network of stores, capital-efficient business model, and growing brand recognition make it a solid long-term bet for investors seeking safety.
Fortis
Next is Fortis (TSX:FTS), which operates a low-risk and regulated electric utility business. The company’s regulated and diversified asset base allows it to generate predictable cash flows, thus making its stock relatively immune to the wild market swings. What stands out is the company’s stellar dividend-growth history. Notably, Fortis is one of the top dividend-paying stocks in Canada, which has raised its dividend for an impressive 50 consecutive years.
The company generates solid cash flows and is growing its rate base through its multi-billion secured capital projects. The company’s $25 billion capital plan will help expand its rate base and support higher dividend payments in the future.
Notably, Fortis expects its rate base to grow at a CAGR of 6.3% through 2028, which, in turn, will enable the company to increase its dividend by 4-6% annually during the same period. Overall, Fortis’s low-risk business and ability to deliver decent total shareholder return makes it a reliable stock.
Loblaw
Loblaw (TSX:L) is another reliable bet. As Canada’s leading food and pharmacy retailer, it provides a diverse array of products. But what distinguishes it is its commitment to offering value pricing, which consistently attracts shoppers to its stores. It’s worth highlighting that with over 2,400 stores, Loblaw has a significant presence across Canada. Moreover, its discount stores continue to perform well irrespective of the economic situation, reflecting a steady demand for their budget-friendly private-label brands.
Loblaw also offers an inflation-fighting price freeze. In addition, it provides the ease of shopping through in-store shopping and pick-up and delivery.
In summary, Loblaw’s substantial size, commitment to providing value, cost-reduction efforts, and strategic procurement initiatives are projected to boost its revenue and profitability. Additionally, its investments in enhancing the retail network and modernizing the supply chain are poised to support its growth.
