The TSX has weathered the recent storms of inflation and rate hikes with notable resilience, and its outlook for the next three years remains optimistic. Forecasters anticipate that the TSX could climb steadily into 2025 and 2026. Bolstered by stabilizing interest rates and continued strength in the energy, financial, and infrastructure sectors. For investors looking to position themselves strategically, here are three “monster” TSX-listed stocks that could outperform over the next three years.
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Enbridge
Enbridge (TSX:ENB) remains a heavyweight on the TSX and a cornerstone for dividend investors. As one of North America’s largest energy infrastructure companies, Enbridge operates a vast network of pipelines transporting oil and natural gas, delivering nearly 30% of North America’s crude oil. Its strong cash flows and reliable dividends make it particularly appealing to long-term investors seeking stability and income.
In its most recent third-quarter (Q3) 2024 earnings report, Enbridge reported adjusted earnings of $1.6 billion, aligning with expectations and showcasing its continued operational resilience. The stock’s revenue saw a 4% year-over-year increase, driven largely by higher throughput across its pipelines. Enbridge also expanded its renewable energy footprint, with projects in offshore wind farms in Europe and solar developments in North America. This diversification strategy ensures Enbridge remains competitive, even as the energy sector evolves.
The future outlook for Enbridge is robust. Management reiterated its 5-7% annual dividend-growth guidance. Supported by a growing portfolio of regulated assets and recent acquisitions, including gas utilities in the U.S. The stock’s investment in low-carbon initiatives and energy storage further positions it to thrive amid the energy transition. With a dividend yield of around 7.5% at writing, Enbridge remains a compelling choice for income-oriented investors.
Bank of Montreal
Bank of Montreal (TSX:BMO), Canada’s fourth-largest bank, is another standout TSX stock with a track record of stability and growth. Financial stocks faced headwinds due to higher interest rates, but BMO’s diversified operations across Canada and the U.S. make it well-positioned to capitalize on economic recovery. With anticipated rate cuts in 2025, banks like BMO could see renewed loan demand, improving their profit margins.
In its most recent earnings release for Q4 2024, BMO posted revenue of $7.3 billion, an 8% year-over-year increase. While earnings per share (EPS) saw a slight decline due to provisions for credit losses, analysts remain confident in BMO’s recovery trajectory. BMO’s acquisition of Bank of the West has significantly expanded its footprint in the U.S., creating opportunities to drive loan growth and cross-border synergies.
Looking forward, BMO’s strategic investments in digital banking and wealth management provide additional growth avenues. The stock targets increased operational efficiencies, which should improve margins in a lower-rate environment. BMO’s dividend yield sits at a solid 4.6% at writing, and the bank has a history of reliable payouts, making it a dependable stock for long-term investors. Over the next three years, BMO is well-positioned to deliver both capital appreciation and steady income.
Imperial Oil
Imperial Oil (TSX:IMO), one of Canada’s leading integrated energy companies, offers significant growth potential. Imperial’s operations span upstream oil sands production, refining, and downstream retail fuel operations. Thus positioning it to benefit across the energy value chain.
In its Q3 2024 earnings report, Imperial reported net income of $1.2 billion, a 20% increase year over year. The stock’s production volumes reached 435,000 barrels per day, underpinned by improved operational performance at its Kearl oil sands project. Imperial is also laser-focused on cost management, achieving significant reductions in operating expenses.
Imperial’s commitment to shareholder returns is a major highlight. The company announced a 6% increase in its quarterly dividend, bringing its yield to approximately 4.2% at writing. Plus, Imperial is aggressively repurchasing shares, enhancing shareholder value. Over the next three years, Imperial’s ability to generate strong free cash flow, coupled with ongoing investments in technology and sustainability, provides a solid foundation for growth. Its focus on reducing carbon intensity through initiatives like carbon capture projects also aligns well with the evolving energy landscape.
Bottom line
For investors seeking a mix of income, growth, and sector diversification, these three “monster stocks” present compelling opportunities to ride the TSX’s upward trajectory over the next three years. By focusing on companies with strong fundamentals and clear growth strategies, investors can position themselves to thrive in an evolving economic landscape.
