After consistently declining for several months, Canada’s YoY (year-over-year) consumer inflation has trended upward again in the last two months. This development has spooked investors by reigniting concerns about more interest rate hikes. Similarly, the U.S. Federal Reserve, in its latest economic projections released last month, estimated that inflation and interest rates might remain elevated for a longer period than earlier expected.
All these worrisome macroeconomic factors combined have taken a toll on investors’ sentiments lately, driving the TSX Composite benchmark down by 3.7% in September. The selloff in Canadian stocks further intensified in the first few sessions of October as the main TSX index has lost nearly 2.7% of its value in the month so far.
In such an unpredictable market environment, adding some safe stocks with low volatility to your portfolio might help. Let’s take a closer look at two such safe stocks you can buy on the Toronto Stock Exchange today.
TransAlta stock
TransAlta (TSX: TA) is a Calgary-headquartered company with a well-diversified portfolio of assets that generate power primarily using natural gas, hydro, wind, and solar energy. It currently has a market cap of $2.9 million, as the stock trades at $11.11 per share after witnessing 8.3% declines in 2023 so far.
Despite macroeconomic woes, TransAlta’s ongoing financial growth trends look impressive. In the first half of the year, the company’s total revenue increased by 43.7% YoY to $1.7 billion with the help of its strong asset optimization and hedging activities. During the same period, its adjusted earnings soared 241% from a year ago to $1.33 per share. This strong operational performance in the first half encouraged its management to raise the company’s full-year 2023 financial outlook.
In July, TransAlta announced its plans to purchase all of the outstanding common shares of TransAlta Renewables. The transaction, which is expected to be completed in October after receiving all necessary approvals, aims to simplify its business structure and strengthen its strategic position in the clean power segment. Considering that, you can expect TransAlta’s financial growth trends to improve further in the coming years and help this safe Canadian stock soar.
Dollarama stock
I find any list of safe TSX dividend stocks incomplete without adding Dollarama (TSX: DOL) to it. This Mont Royal-based company operates a chain of value retail stores across Canada. After gaining 17.4% on a year-to-date basis, its stock currently trades at $92.94 per share with a $26.3 billion market cap.
The demand for Dollarama essential and other affordable products tends to remain steady, even in difficult economic environments, making its stock much safer than most other retail stocks on the TSX today.
To give you an idea about its recent financial growth trends, Dollarama’s revenue rose 20.1% YoY in the first half of 2023 to $2.8 billion, partly due to a rise in its total number of stores in the last year. More importantly, its adjusted earnings in the first half jumped 29.6% to $1.49 per share.
