The Motley Fool

3 Top Canadian Stocks to Buy in a Volatile Market

Volatile market, stock volatility
Image source: Getty Images

The Canadian equity markets were volatile last week, with the S&P/TSX Composite Index falling 0.9% amid fears of the Federal Bank rolling back its expansive monetary policies sooner than earlier expected. Also, the rising inflation and a slowdown in the recovery rate are a cause for concern. So, in this volatile environment, investors can strengthen their portfolios by buying the following three Canadian stocks.

Waste Connections

Waste Connections (TSX:WCN)(NYSE:WCN) could be an excellent buy in this volatile environment, given the essential nature of its business. The company provides collection, transfer, and disposal of non-hazardous waste in secondary or exclusive markets. So far this year, the company’s stock price has increased by over 28%, comfortably outperforming the broader market.

Meanwhile, the uptrend could continue. The improvement in economic activities and higher exploration and production activities amid rising oil demand could boost its financials in the coming quarters. Along with organic growth, the company also focuses on strategic acquisitions to drive its growth. The company has made 16 acquisitions so far this year.

Given its healthy financial position, the company could continue with its future acquisitions. Meanwhile, the company has also rewarded its shareholders by raising its dividends by over 10% for the last 10 consecutive years. Its forward dividend yield currently stands at 0.62%.

Telus

Telecommunication companies generate steady cash flows, thanks to their large and growing customer base and a higher percentage of revenue coming from recurring sources. So, I have selected TELUS (TSX:T)(NYSE:TU) as my second pick. It is investing aggressively to expand its 5G and broadband services. As of June 30, the company’s 5G service covered 13.4 million Canadian citizens, representing 36% of the country’s population.

Meanwhile, Telus expects to expand its 5G service to 70% of the Canadian population by the end of this year. It recently acquired licenses in British Columbia, Alberta, Manitoba, Ontario, and Quebec by investing $1.95 billion. Further, it focuses on innovative products, superior connected experiences, and premium bundled offerings to drive its customer base. Also, its high-growth verticles, such as TELUS International, TELUS Health, and TELUS Agriculture, could boost its financials in the coming years.

Besides, Telus has been rewarding its shareholders by consistently raising its dividends for 11 consecutive years. Currently, it pays a quarterly dividend of $0.3162, with its forward yield standing at 4.32%.

Fortis

My final pick would be Fortis (TSX:FTS)(NYSE:FTS), which operates 10 regulated utility businesses serving around 3.4 million customers. Thanks to its highly regulated business, the company has delivered an impressive average total shareholders’ return of 14% per annum for the last 20 years. Also, the strong cash flows have allowed the company to raise its dividends consistently for 47 consecutive years. Currently, its forward yield stands at a healthy 3.48%.

Meanwhile, the uptrend could continue, given Fortis’s continued investment in expanding its rate base. Its 2021-2015 capital expenditure plan of $19.6 billion could increase its rate base by around $9.8 billion to $40.3 billion at a compound annual growth rate (CAGR) of 6%. Along with these investments, the favourable rate revisions and high-quality earnings from its regulated assets could drive its financials in the coming quarters.

So, amid the optimism over its future cash flows, Fortis’s management expects to increase its dividends at a CAGR of 6%.

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.

The Motley Fool recommends FORTIS INC and TELUS CORPORATION. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.