This year has been challenging, even for experienced investors, given the volatility. High inflation, rising interest rates, and slowing growth appear to have made investors nervous, thus rising volatility in the equity markets. So, if you would like to create a portfolio in these circumstances, here are three low-volatility TSX stocks that you can add now.
Waste Connections
Given the essential nature of its business and solid returns over the last 10 years, Waste Connections (TSX:WCN)(NYSE:WCN) is my first pick. The waste management company has outperformed the broader equity markets over the last 10 years by delivering total returns of 694%.
Last week, the company delivered a solid second-quarter performance, with its revenue growing by 18.4%.
Favourable pricing, growth in E&P (exploration and production) waste activities, and acquisitions over the last four quarters drove the company’s top line. Along with revenue growth, the company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 16.9%. However, its EBITDA margins declined marginally from 31.6% in the corresponding quarter of the previous year to 31.2%.
Meanwhile, after reporting its second-quarter performance, Waste Connections’s management raised its revenue and adjusted EBITDA guidance for this year. It has rewarded its shareholders by raising its dividends for the last 12 years at a CAGR (compounded annual growth rate) of over 15%.
Fortis
Fortis (TSX:FTS)(NYSE:FTS) operates a regulated electric and natural gas utility business serving around 3.4 million customers. With over 99% of its assets underpinned by long-term contracts, the company’s cash flows are stable and reliable. Supported by its solid underlying business and growth initiatives, the company has delivered an average total shareholder return of 12.8% over the last 20 years, outperforming the broader equity markets.
Meanwhile, Fortis is progressing with its $20 billion capital-investment plan, which would grow its low-risk rate base at a CAGR of 6% through 2026. The expansion of the rate base could drive its growth in the coming years. Amid the optimism over growing cash flows, the company’s management hopes to raise its dividends at a CAGR of 6% through 2025. Given its stable cash flows, healthy growth prospects, and excellent track record of 48 years of dividend growth, I believe Fortis would be an ideal buy for beginners.
BCE
The growing penetration of telecommunication services into our day-to-day activities and the advent of 5G have created a multi-year growth potential for the telecom sector. Given the favourable market conditions, I have selected BCE (TSX:BCE)(NYSE:BCE), one of the three top players in Canada, as my final pick.
The company posted a solid second-quarter performance last week, adding 110,761 mobile phone subscribers. The company’s second-quarter revenue of $5.86 billion was in line with analysts’ expectations, while its adjusted EPS (earnings per share) of $0.87 surpassed expectations by $0.03. Additionally, the company has announced the expansion of its 5G+ services and expects to cover 40% of the Canadian population by this year’s end. The expansion of its high-speed broadband services and growth in media revenue could continue to drive its revenue in the coming quarters.
Further, BCE pays a quarterly dividend of $0.92/share and trades at an attractive NTM (next 12-month) price-to-earnings multiple of 18.7, making it an excellent buy in this volatile environment.
