My Take: 3 of the Best TSX Stocks to Own in 2023

Here are top TSX stocks that could outperform this year.

| More on:
Man data analyze

Image source: Getty Images

Here are my top three TSX stocks to bet on in the new year.

Canadian Natural Resources

Stocks might continue to perform weakly in 2023 amid higher inflation and rapidly rising rates. Higher costs create pressure on earnings, which weighs on stock performances. At the same time, energy producers play well in inflationary environments, as they have the pricing power. They can effectively pass a higher cost burden on to their customers.

As a result, energy bigwig Canadian Natural Resources (TSX:CNQ) seems an appealing bet for 2023. Its scale and higher expected earnings growth will likely create shareholder value. It has returned 50% this year, which is in line with its peer TSX stocks. Moreover, massive deleveraging and a strong price scenario will drive positive investor sentiment, as it did in 2022.

CNQ stock currently offers a juicy dividend yield of 4.5%. It has raised shareholder payouts for the last 23 consecutive years. As the company expects higher free cash flows in 2023, the management will assign a higher chunk of those to dividends. So, expect superior dividends and more value from CNQ going into 2023.


Canadian value retailer Dollarama (TSX:DOL) is one of the few all-weather stocks in Canadian markets. It has outperformed in this year’s bear market as well as in the earlier bull markets. That’s because Dollarama managed to keep its earnings growth intact in all kinds of economic cycles. Also, its strong execution has played well for margin stability over the years.

DOL stock has returned 28% this year, while TSX stocks at large have declined 8%. Some profit booking was seen at its all-time high levels, which brought the stock down around 7% last month. So, this could be the time to bet on this outperformer amid weakness.

Dollarama offers its customers value that stands particularly tall during inflationary times. Its large geographical footprint beat peer retailers by a big margin, which bodes well for its top-line growth. The company is aiming to increase its store count as its key growth strategy. Dollarama has vital advantages, like stable earnings growth and margin stability in almost all business cycles, which drives its outperformance.

Bank of Montreal

Canadian banks witnessed a downturn, as rates rose faster than expected last year. Bank stocks might not see an immediate recovery in 2023. However, if your investment horizon is longer, Bank of Montreal (TSX:BMO) looks like an attractive bet.   

Its solid balance sheet and stable earnings growth will likely create decent shareholder value in the long term. Plus, Bank of Montreal has some of the longest dividend-payment streaks among the Big Six. It currently yields 4.7%, marginally higher than peer TSX banks.

BMO has the highest common equity tier-one ratio of 16.7% at the end of the fiscal third quarter of 2022. This is way higher than regulatory requirements and the industry average. The higher ratio indicates it will likely be well positioned to withstand an economic shock.

BMO stock has lost 10% this year. It could see some recovery later in 2023, as the rate-hike cycle pauses or reverses. Its strong dividend profile and earnings-growth prospects might help it outperform in the long term.   

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 Canadian Natural Resources. The Motley Fool has a disclosure policy.  Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Stocks for Beginners

A worker uses a laptop inside a restaurant.
Stocks for Beginners

Stubborn Interest Rates: 2 TSX Stocks That Can Play Along (and Even Win)

Higher interest rates are actually good for these stocks. They trade at good valuations and provide nice dividends.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Stocks for Beginners

Buying These 2 Stocks Is a Good Way to Hedge Against a Falling Market

Investors looking to hedge against a stock downturn should consider these two stocks as viable long-term picks.

Read more »

Dollar symbol and Canadian flag on keyboard
Stocks for Beginners

2 Canadian Stocks I’ll Be Buying Hand Over Fist in 2023

There are some great Canadian stocks on sale right now. Here's a duo of companies I'm buying that you may…

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Stocks for Beginners

Has ATZ Stock Bottomed Out?

Has ATZ stock finally bottomed out after losing nearly 10% of its value in 2022? Let’s find out.

Read more »

Stocks for Beginners

4 Top Value Stocks to Buy in February 2023

Not only are all these value stocks worth considering, each is growing significantly on the TSX today!

Read more »

Couple relaxing on a beach in front of a sunset
Stocks for Beginners

3 Stocks That Could Help You Retire a Millionaire

Looking for some stocks that can help you retire rich? Here are three buy-and-forget options that will do the trick.

Read more »

Target. Stand out from the crowd
Stocks for Beginners

3 Must-Buy TSX Stocks for Anyone New to Investing

Are you new to investing? These three TSX stocks for income, value, and growth are must-buys for any Canadian investor…

Read more »

grow dividends
Stocks for Beginners

After the Spinoff, Brookfield Stock Rose 16% in January

Brookfield stock is a wonderful business with a track record of delivering annualized returns of over 16%. And it's cheap…

Read more »