Rising Rates, Safe Investments: 3 TSX Stocks to Consider for Steady Returns

grow dividends

Image source: Getty Images

Interest rates have risen steadily over the past year as Canada’s central bank implemented tight monetary policy to control inflation. While rising rates have made equities unattractive, the moderation in inflation suggests the central bank could ease its aggressive stance. Whether interest rates will come down or not remains a waiting story. Meanwhile, investors can bet on relatively safe investments to generate stable returns in all market conditions.

In this context, I will discuss three fundamentally strong Canadian stocks that are relatively safe and offer decent capital gains and dividend income regardless of the economic situation.

Dollarama

The first is Dollarama (TSX:DOL). This value retailer offers a wide variety of products at fixed multiples and low prices, making it a safe stock to buy even in a rising interest rate environment. It’s worth mentioning that Dollarama’s sales and earnings have steadily increased over the past decade.

Meanwhile, its profitable growth has allowed the company to increase returns to its shareholders through higher dividend payouts.

Thanks to its strong financial performance, Dollarama shares have consistently outperformed the broader markets by a wide margin. Its shares are up more than 93% over the past three years, while they are up more than 16% in the past year.

Looking ahead, its value pricing, wide variety of everyday products, store base in the domestic market and growing global footprint position it well to deliver strong sales and profits. Meanwhile, its loyal customer base and growing digital footprint bode well for growth.

Fortis

Speaking of security, investors should consider investing Fortis (TSX:FTS) shares. The company operates 10 regulated utilities that witness stable demand and generate predictable and growing cash flows, making it relatively immune to economic conditions.

Thanks to its low-risk business and growing cash flows, Fortis has increased its annual dividend for 49 consecutive years. In addition, its shares have remained resilient, despite major changes in the market.

Looking ahead, its $22.3 billion capital plan will allow the company to expand its rate base at a compound annual growth rate (CAGR) of more than 6% through 2027. A growing rate base will drive its earnings and future dividend payments.

Its high-quality earnings, growing rate base and energy transition opportunities bode well for growth. Fortis plans to increase its dividend at a CAGR of 4-6% through 2027. Meanwhile, its defensive business model could continue to offer stability to its portfolio.

Canadian National Railway

Shares of the leading transport company Canadian National Railway (TSX:CNR) are a no-brainer for adding safety to your portfolio and generating healthy capital gains. This rail freight company is a trade facilitator. Thus, their services are considered essential for the economy. Each year, it transports millions of tons of product across North America, which supports its financial and stock performance.

The company’s defensive business model, well-diversified portfolio, improved operational efficiency and solid balance sheet position it well to deliver reliable growth and stability in the coming years.

In addition to capital gains, investors will likely benefit from the company’s focus on returning cash to its shareholders. Canadian National Railway’s dividend has grown at a CAGR of 15% over the past 26 years. Additionally, its growing earnings base indicates that the company could continue to increase its dividend in the coming years, making it an attractive dividend stock.

#Rising #Rates #Safe #Investments #TSX #Stocks #Steady #Returns

Related Posts

Stocks rise as first-half positive tone persists: market wrap

Stocks rise as first-half positive tone persists: market wrap

(Bloomberg) — Stocks started the new quarter with gains, supported by positive momentum on Wall Street and signs of moderating U.S. inflation. Read more from Bloomberg Mining…

BC port workers' strike sparks supply chain and inflation concerns

BC port workers’ strike sparks supply chain and inflation concerns

Open this photo in the gallery: Longshoremen with the ILWU strike at Canada’s busiest port in Vancouver on July 1.CHRIS HELGREN/Reuters A strike affecting British Columbia ports…

Private equity owner plans to breathe new life into historic Muskoka inn

Private equity owner plans to breathe new life into historic Muskoka inn

Open this photo in the gallery: Windermere House, located on Lake Rosseau, on June 14. The original Windermere House was destroyed by fire in 1996. It was…

Lumber prices rebound as the market is spooked by supply concerns

Lumber prices rebound as the market is spooked by supply concerns

Open this photo in the gallery: Lumber sale at a home improvement store in Homer Glen, Illinois on June 21.Scott Olson/Getty Images Lumber prices have risen in…

Construction labor shortages affecting housing supply: experts

Construction labor shortages affecting housing supply: experts

Canada’s construction industry has a few tens of thousands of workers, and experts say an upcoming wave of retirements could make the problem worse. TORONTO – The…

Celebrity Cruises ship

Celebrity Cruises makes a major increase in fares for passengers

Celebrity Cruises has quietly updated their FAQ’s Free Program page with higher fares as of Tuesday, July 11, 2023. Automatic gratuities will be increased for all staterooms,…

Leave a Reply

Your email address will not be published. Required fields are marked *