3 Low-Volatility Stocks for Smoother Sailing

In a volatile market, low-vol stocks can tame risk and provide more predictable returns.

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Despite the TSX’s 4.5% year-to-date gain, the stock market remains highly volatile. The persistent inflation and more rate hikes could trigger a market pullback. Fortunately, there are safety nets to choose from in the sea of stocks.

Risk-averse investors can start with the constituents in the S&P/TSX Composite Low Volatility Index. According to the TMX Group, the operator of Canadian stock exchanges, the index comprises 50 of the least-volatile stocks.

Loblaw Companies Limited (TSX:L), Rogers Communications (TSX:RCI.B), and Crombie (TSX:CRR.UN) belong to the group. You can invest in them for smoother sailing for the rest of 2023 and beyond.

Enduring and profitable

The key investment takeaway for Loblaw is its enduring business producing consistent profits. The $38.4 billion food and pharmacy company is an icon and a valuable brand in Canada (ranked 27th of the top 100). The stock has raised it dividends for 12 consecutive years and yields a modest 1.49% today ($119.70 per share).

All four business segments, namely food retail (+3.1%), drug retail (+7.4%), pharmacy & healthcare services (+4.7%), and front store (+10.3%), reported higher sales in Q1 2023 versus Q1 2022. Loblaw’s Chairman and CEO, Galen G. Weston, said, “In the face of ongoing inflation, we are working hard to deliver the value and choice Canadians are looking for.”

Loblaw operates a large supply chain network and will buy hydrogen fuel cell electric vehicles (FCEV) for long-haul deliveries. Also, its supermarkets, drugstores, offices, and distribution centres will soon generate electricity from renewable energy sources like solar, wind, and water.

A new growth company

Rogers Communications is strong but became stronger after the merger with Shaw Communications. The $31.3 billion telco and media giant now boasts the largest and only national coast-to-coast 5G wireless and wireline networks in Canada.

The integration of the businesses to optimize the organizational structure is ongoing. Its CEO, Tony Staffieri, said, “We’re a growth company, and we remain committed to creating thousands of jobs over the next few years as we invest in our customers, communities, and country.” Rogers has 2,000 new hires and plans to employ more as the business grows.

Besides the $1 billion in synergy benefits, management projects the merger to deliver more than $2 billion in cash flow soon. In Q1 2023, capital expenditures reached a record $892 million. Meanwhile, net income in the same quarter rose 30% to $511 million versus Q1 2022.

If you invest today, RCI.B stock trades at $58.91 per share (-5.5% year to date) and pays a decent but safe 3.4% dividend.

Defensive property portfolio

Crombie is the real estate arm of food retail conglomerate Empire Company Limited. The $2.5 billion real estate investment trust (REIT) owns 303 properties, and the portfolio’s strength comes from grocery-anchored, industrial, and residential properties.

Empire (Sobey’s) is the anchor tenant in 89% of the retail properties. The weighted average lease term is 11.5 years. Crombie maintains a low-volatility profile because of its defensive grocery-anchored portfolio. At $13.80 per share, you can partake in the lucrative 6.45% dividend.

Rock-steady payouts

Loblaw, Rogers Communications, and Crombie can survive a recession should it materialize in the second half of 2023. While the stock prices could drop in a bear market, the dividend payments should remain rock-steady.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications and TMX Group. The Motley Fool has a disclosure policy.

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