Although the recent data indicates that Omicron is less severe than the earlier variants, the growing number of new infections is still a cause for concern. So, I expect the volatility in the equity markets to continue. Here are four top Canadian stocks that you can buy to strengthen your portfolios against rising volatility.
Waste Connections
In this volatile environment, Waste Connections (TSX: WCN)(NYSE: WCN) would be an excellent buy due to the essential nature of its business. It collects, transfers, and disposes of non-hazardous waste in secondary or exclusive markets. With the company operating in a lesser competitive environment and disposable locations closer to waste generation, it has maintained its adjusted EBITDA margin of around 30%.
Waste Connections also focuses on strategic acquisitions to drive growth. In the first three quarters of 2021, the company has acquired US$240 million of assets which could boost its annualized revenue by US$100-US$150 million from 2022. The improvement in economic activities amid economic expansion could drive the demand for the company’s services. Additionally, the company has raised its dividends by double-digits for the last 11 years, which is encouraging.
Fortis
Fortis (TSX: FTS)(NYSE: FTS) is immune to market volatilities due to its highly regulated and diversified utility business. With 99% of regulated assets, it generates stable and predictable cash flows, thus raising its dividends for 48 consecutive years. Currently, it pays a quarterly dividend of $0.535 with its forward yield standing at 3.5%.
Fortis has planned to invest around $20 billion over the next five years, increasing its rate base at a CAGR of 6% to reach $41.6 billion by 2026. The rate base growth, solid underlying business, and favourable rate revisions could boost Fortis’s financials in the coming years. Management expects to raise its dividends at a rate of 6% through 2025. So, Fortis would be an excellent buy in this volatile environment.
BCE
With the rising digitization, remote working, and remote learning, the demand for fast and reliable internet service is rising, benefiting BCE (TSX: BCE)(NYSE: BCE), one of Canada’s three top telecommunication players. Amid the expanding addressable market, the company has accelerated its investments by expanding its 5G and broadband services.
It earns a significant percentage of revenue from recurring sources, thus generating stable and predictable cash flows. Supported by these stable cash flows, BCE is less susceptible to market volatilities while consistently raising its dividends. Over the last 10 years, BCE has increased its dividends at a rate of 6.7%. Meanwhile, its forward dividend yield stands at 5.32%. Also, its financial position looks healthy, with its liquidity standing at $6.1 billion as of the September-ending quarter. So, I believe BCE would be an excellent addition to your portfolio.
Bank of Nova Scotia
Supported by its strong performance, Bank of Nova Scotia (TSX: BNS)(NYSE: BNS) had outperformed the broader equity markets last year. I expect the uptrend to continue amid credit growth due to improvement in economic activities. The company’s investment in strengthening its digital capabilities and geographical expansion could drive its financials in the coming quarters.
Bank of Nova Scotia has significant exposure to high-growth markets which could witness robust growth in the coming quarters due to economic expansion. BNS has healthy growth prospects and attractive forward price-to-earnings multiple of 9.9. The company also pays quarterly dividends with its forward yield standing at 4.47%.
