Worried About a Recession? 2 TSX Giants to Outpace the Market

These are two top TSX giants that are worth buying for those particularly concerned about increased volatility and economic risks right now.

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With a global recession looming on the horizon, both companies and investors are taking several measures to deal with its impact. Investors are searching for stocks that can outperform the market in the long run. 

Here are two such TSX giants that could be a perfect choice. 

Top TSX giants to buy: Royal Bank of Canada

In terms of market capitalization, Royal Bank of Canada (TSX:RY) is the largest provider of financial services in the nation. It also deals in home equity financing, auto financing, mutual funds, and more. Additionally, apart from Canada, it operates in 36 other nations. 

Despite concerns of contagion risks in the sector, RY stock has been relatively insulated. This is a stock that’s dipped recently, but also regained much of its losses.

That’s partly due to the fact that the company’s recent results in this year’s first quarter speak to Royal Bank’s value relative to its banking peers. Net income from its Personal and Commercial banking segment came in at US$2,126 million. This represented an 8% increase from last year’s same quarter. These strong earnings were primarily driven by loan volume growth as well as a surge in net interest income and credit card and business lending.

Furthermore, in its capital markets segment, the company touted 9% growth in net income, bringing in US$1,223 million. This can be accredited to improved client activity as a result of lower tax rates and higher profits in global markets. 

The bank has also declared a quarterly dividend of $1.32. It will be payable on May 24, 2023, and will be available to shareholders on record as of April 24. The stock’s current dividend yield is right around 3% at the time of writing, supported by a strong payout ratio of less than 45%.   

Brookfield Asset Management

Brookfield Asset Management (TSX:BAM) is a multinational conglomerate, with almost US$800 billion in assets under management. The company’s portfolio consists of private equity, infrastructure, real estate, sustainable energy, credit, and other segments. 

According the most recent results released in February, Brookfield posted strong results for the quarter that ended on Dec. 31, 2022. Brookfield Asset Management not only posted strong results, but also raised significant capital. Additionally, the company provided investors with annual distributable earnings of US$2.1 billion. That’s an impressive number, as is BAM’s net income of US$19 billion.

Recently, the Canadian asset management company has planned to invest AU$15.35 billion to acquire Australia’s second-largest power company, Origin Energy. Brookfield plans to enhance this subsidiary’s value by replacing Origin’s conventional energy assets with sustainable assets over a 10-year period. 

Moreover, Brookfield remains a world-class company, with strong global demand for its shares. Approximately 59% of the company’s shares are held by institutional investors. This shows the optimistic outlook of such entities when it comes to Brookfield stock and indicates its future growth potential. 

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.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

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