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Top Canadian Stocks: How the 3 Biggest TSX Stocks Fared in 2020

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Although TSX stocks at large have fully recovered from their pandemic lows, the recovery has not been all-inclusive. Let’s see how the three biggest Canadian stocks played out the crazy year that was 2020.

Top Canadian stocks: Shopify

The tech titan Shopify (TSX:SHOP)(NYSE:SHOP) saw one of the best years since its market debut in 2015. Take a moment to digest Shopify stock’s outperformance this year compared to broader markets. While the TSX Composite Index gained a mere 2% this year, the digital store enabler stock surged a striking 195% so far in 2020.

The pandemic and ensuing lockdowns underlined the need to set up an online store for small- and medium-scale businesses. That’s why Shopify witnessed a surge in new merchants joining its platform.

In 2016, Shopify’s revenues were close to $390 million, while in the last 12 months, its revenues have grown to $2.45 billion. That’s an awe-inspiring 60% growth compounded annually.

Shopify’s scale, innovative product launches, and prudent business associations have fueled its performance in the last few years. Its large addressable market and dominant position will likely continue to push the stock further higher next year.

Royal Bank of Canada

At a $149 billion of market cap, Royal Bank of Canada (TSX:RY)(NYSE:RY) is the second-biggest stock on the TSX. The stock has substantially underperformed this year but has managed a decent recovery post-pandemic crash.

Canada’s largest bank by customer base, Royal Bank posted a net income of $11.4 billion in 2020, an 11% fall compared to 2019. Stable housing markets, quicker-than-expected economic recovery, and robust government aid helped Canadian banks through this gruesome year of 2020.

Royal Bank of Canada has set aside almost $4.4 billion in provisions for credit losses this year. Large provisioning will likely insulate the bank’s bottom line from bad loans next year. Even if economic recovery seems in sight, revenue growth will likely remain a bigger challenge for Canadian banks next year.

Almost all major banks in Canada, including Royal Bank, are well capitalized and have high-quality loan portfolios. They are great investments for long-term investors, given their stable dividend yields and attractively valued stocks. Royal Bank stock yields 4.2% at the moment, higher than TSX stocks on average.


The country’s biggest energy company Enbridge (TSX:ENB)(NYSE:ENB) is one of the worst-performing stocks on the TSX. It has lost more than 20% in 2020 amid volatile oil prices and overall uncertainty in the energy sector as a whole.

However, Enbridge, when compared in isolation, has been relatively well-placed throughout this year and deserves a better valuation. The pipeline-related uncertainties certainly have weighed on its stock recently. But given the stable revenues and dividend growth, Enbridge is relatively well placed in this crisis.

Enbridge maintained its dividend-increase streak when many major energy companies trimmed or suspended dividends in 2020. For 2021 as well, the midstream energy company has announced a payout increase of 3% year over year. Its long-term contracts based on fixed-fees and relatively lower exposure to crude oil prices enable stable earnings and dividends.

Enbridge stock yields more than 8%, making it the top-yielding one among the biggest Canadian stocks. If you invest $10,000 in ENB stock today, it will generate $800 in dividends in 2021.

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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 Vineet Kulkarni has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Enbridge, Shopify, and Shopify.

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