It’s no secret that inflation has climbed a lot this year. In June 2022, Canada’s annual inflation rate rose to 8.1%. That represents a 5% increase over the inflation rate reported the month prior. With that in mind, investors are wondering what to do with their portfolio. It’s imperative that investors focus on companies that may not be negatively affected by inflation. In this article, I’ll discuss three inflation-resistant TSX stocks you could buy right now.
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Someone’s gotta do the dirty work
Regardless of what the economy looks like, humans will continue to generate waste. It’s inevitable. That’s why companies like Waste Connections (TSX: WCN)(NYSE: WCN) may be in business forever. This company provides non-hazardous waste collection in 43 American states and six Canadian provinces. It’s estimated that Waste Connections serves more than eight million residential, commercial, and industrial customers.
Waste Connections stock has traded about flat for the year, losing 0.5% of its value. When dividends are considered, Waste Connections stock shows an even better performance, ending slightly green as of this writing. Although these numbers aren’t anything to write home about, it’s certainly a lot better than what the broader market’s been able to do this year. Since the start of 2022, the S&P 500 has fallen nearly 14% and the S&P/TSX has fallen more than 7%.
Waste Connections is also an excellent dividend stock, raising its distribution in each of the past 11 years. Over the past five years, Waste Connections has raised its dividend at a compound annual growth rate (CAGR) of 14.3%, helping investors keep ahead of the long-term inflation rate.
Consumers will continue to buy food
Although consumer spending has decreased, it’ll take a major catastrophe to keep consumers away from food. Of course, restaurants and the like may struggle for a while but buying raw food and other ingredients likely won’t go away anytime soon. Buying groceries is essential in life and I find a hard time believing that consumers would ever choose to go without companies like Metro (TSX: MRU). Operating more than 500 locations, this company is the third-largest grocer in Canada.
In Q2 2022, Metro reported a 1.9% increase in revenue compared to the same quarter in the year prior. Even more impressively, Metro stock has managed to climb nearly 6% this year. That means that Metro stock has greatly outperformed the broader market so far this year.
Listed as a Canadian Dividend Aristocrat, Metro has managed to increase its dividend distribution in each of the past 26 years. That gives it the seventh-longest active dividend-growth streak in the country. Over the past five years, Metro’s dividend has grown at a CAGR of 11%.
These companies thrive in high-interest environments
Finally, investors should consider adding banks to their portfolio. Today’s economic environment is very friendly to bank stocks. Historically, banks have seen a widening in profit margins as interest rates increase. This should make them more appealing to investors, especially value-oriented ones. If I had to choose one bank to invest in, it would be Bank of Nova Scotia (TSX: BNS)(NYSE: BNS).
Of all the stocks listed in this article, Bank of Nova Scotia’s dividend may be the most appealing. The company offers a forward dividend yield of 5.28%, giving investors massive value for their dollar. Bank of Nova Scotia is also listed as a Canadian Dividend Aristocrat, raising its dividend over the past 11 years.
The Canadian banks are always an “easy” stock to buy for your portfolio. But during times like these, they become even more of a no-brainer.
