The Bank of Canada (BoC), our country’s central bank, elected to hold its benchmark interest rate at 4.5% on Wednesday, April 12. That has remained the benchmark rate since January 2023. Investors have been given some time to breathe after one of the most aggressive policy shifts in recent memory. However, rates are at their highest level in roughly 15 years. Today, I want to look at three TSX stocks that can offer income and stability in this climate. Let’s jump in!
This TSX stock is worth trusting for the long haul
Investors may want to zero in on the industrials sector, as interest rates remain at their highest point since the first decade of this millennium. Indeed, industrials have historically received a boost, as interest rate tightening has coincided with periods of economic growth. Canada’s economy has delivered solid growth since the end of the COVID-19 pandemic, but the status quo is fragile.
Toromont Industries (TSX:TIH) is the first TSX stock I’d look to buy in the second half of April. This Toronto-based company provides specialized capital equipment, particularly Caterpillar, in Canada, the United States, and around the world. Shares of this TSX stock have increased marginally month over month as of close on April 19. The stock is up 10% in the year-to-date period. Investors who want more information on its recent performance can toggle the interactive price chart below.
This company is set to unveil its first-quarter (Q1) fiscal 2023 earnings after markets close on April 27. In Q4 2022, Toromont reported revenue growth of 20% to $1.15 billion. Meanwhile, it posted net earnings of $159 million, or basic earnings per share (EPS) of $1.94 — up 51% and 52%, respectively, compared to Q4 fiscal 2021. For the full year, Toromont posted revenue growth of 9% to $4.23 billion and net earnings climbed 37% to $454 million, or $5.52 in basic EPS.
Shares of this TSX stock currently possess a solid price-to-earnings (P/E) ratio of 19. Meanwhile, it offers a quarterly dividend of $0.43 per share. That represents a modest 1.5% yield.
Two TSX stocks in the metals space I’m adding as interest rates remain high
Steel prices have achieved strong growth over the past month, as supply has failed to meet global demand. In this piece, I want to target two of my favourite TSX stocks in the metals space.
Stelco Holdings (TSX:STLC) is a Hamilton-based company that is engaged in the production and sale of steel products in Canada, the U.S., and to a worldwide client base. Shares of this TSX stock have dipped 7.6% over the past month. However, the stock is still up 11% so far in 2023.
In fiscal 2022, Stelco saw revenues decline 16% year over year to $3.46 billion. Meanwhile, adjusted net income plunged 52% to $819 million. Shares of this TSX stock possess a very favourable P/E ratio of 3.4. Stelco also offers a quarterly distribution of $0.42 per share, which represents a 3.3% yield.
Russel Metals (TSX:RUS) is another metals stock I’d target in this beefy interest rate environment. It operates as a metal distribution company based in Toronto. The company services the Canadian and U.S. metals markets. This TSX stock has dipped 1.9% over the past month. However, its shares have climbed 15% so far in 2023.
This company achieved record annual revenues of $5.1 billion in 2022. Russel Metals put together a strong year, despite very volatile steel prices throughout. Meanwhile, strong customer demand lent support to the company’s metals service centres and steel distributors segments. Shares of this TSX stock last had a very attractive P/E ratio of 5.6 at the time of this writing. Moreover, it offers a quarterly dividend of $0.38 per share, representing a solid 4.5% yield.