September could be TSX’s worst month in 2021, following three straight weeks of losses. Canada’s primary stock index closed at 20,401.70 on September 24, 2021, 418.70 points (-2%) lower than its record high of 20,821.40 posted early this month. While the index remains in positive territory year to date (+17.03%), seven of the 11 sectors lost in the last 30 days.
The ride has been topsy-turvy lately, because of factors abroad, particularly the potential insolvency of a top property developer in China. Beijing’s banning of digital currencies could also impact the technology sector. However, if you have the appetite to invest heading into Q4 2021, three TSX stocks are the best buys today for income stability.
Energy was the losing sector in 2020, but it’s the steadiest performer this year. The sector advanced 15.78% and 6.28% in the last 30 and five days, respectively. One of the top-performing energy stocks is TC Energy (TSX:TRP)(NYSE:TRP), with its 25.04% gain. At $62.88 per share, the dividend yield is a mouth-watering 5.53%.
The $61.56 billion energy infrastructure company has rewarded investors with a 12% average return since 2000. Likewise, management has increased dividends for 21 consecutive years. TC Energy boasts diversified high-quality assets that are platforms or levers to fund growth.
Besides the three critical infrastructure assets, TC Energy has a $21 billion secured capital program through 2025. The growth projects will allow “in-corridor” expansions, and, at the same time, support annual dividend growth of about 5-7%. Market analysts are split between buy and strong buy ratings.
Solid sales activities
Like banks, insurance companies did pretty well in overcoming the COVID-19 headwinds. Great-West Lifeco’s (TSX:GWO) trailing one-year price return is 50.16%. At $38.47 per share, investors enjoy a 31.44% year-to-date gain on top of a 4.55% dividend.
The $35.76 billion company is a powerhouse in life and health insurance, reinsurance, investment & retirement services, and asset management. Great-West is also Canada’s leading group benefits provider. It’s 130 years old and maintains a strong competitive position against other industry giants and emergent fintech companies.
In Q2 2021, solid sales activities across Great-West’s business segments resulted in a 17% growth in total base earnings versus Q2 2020. Its president and CEO Paul Mahon also said its business integration activities in the U.S. are progressing well. It should deliver desired financial results and strong customer retention.
Stable and growing cash flows
Capital Power (TSX:CPX) is ideal for investors seeking capital protection amid market uncertainties. This independent power producer (IPP) is as old as Great-West Lifeco. It owns and operates high-quality, utility-scale power generation facilities in Canada and across the border in the United States.
The $5.02 billion company describes itself as growth oriented with a strategic focus on sustainable energy, including renewable and thermal. Because of its contracted and merchant portfolio, Capital Power generates stable and growing cash flows. In the first half of 2021, net income was $118 million, or 413% higher than the same period in 2020.
Investors were delighted with the 6.8% increase in the common share dividend. The share price is $43.78 (+28.5% year to date), while the yield is 5% if you invest today.
Own the best TSX stocks
Some companies fare better during economic downturns. The TSX could be on the verge of a market correction. It would help to purchase and own the best Canadian stocks before the last quarter of 2021.