The recently concluded earnings season results can help people firm up their investment decisions. For those looking for safe Canadian stocks to buy this December, the Royal Bank of Canada (TSX:RY) and Metro Inc. (TSX:MRU) should be the top picks.
The Big Bank and iconic retailer are strong buys following their impressive results in Q4 and the full-year fiscal 2023. The Big Bank beat profit expectations, while the iconic retailer reported record sales and earnings.
All-weather bank
RBC is hard to ignore yet not included in anyone’s buy list. The $173.4 billion bank is Canada’s largest publicly listed company and financial institution. It has survived countless economic downturns, the Great Depression, and two World Wars. The bank is also responsible for developing the country’s oil, gas, and resource exploration businesses.
In the three months that ended Oct. 31, 2023, net income rose 6.1% to $4.1 billion versus Q4 fiscal 2022. Notably, provision for credit losses (PCL) jumped 89% year over year to $720 million. For the full fiscal year, revenue increased 14.6% to $56.1 billion, although net income declined 6% to $14.9 billion compared to fiscal 2022.
“In a year defined by uncertainty, RBC served as a stabilizing force for our clients, communities, colleagues and shareholders. Our overall performance in 2023 exemplifies our standing as an all-weather bank,” said Dave McKay, RBC’s President and CEO.
McKay adds, “Our strong balance sheet, prudent risk management and diversified business model continue to underpin our ability to deliver differentiated client experiences and advice across all our businesses.” However, only the Capital Markets segment (+23%) reported year-on-year earnings growth.
- We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if RBC made the list!
RBC looks forward to gaining access to trade finance and cash management capabilities and creating additional cross-selling opportunities with the acquisition of HSBC Canada. It expects to close the $13.5 billion transaction in Q1 2024. McKay is confident that RBC can meet its medium-term objectives, including more than a 16% ROE.
Historic records
Metro is a defensive holding more than anything. The $15.7 billion food and pharmacy company functions as a franchisor, distributor, manufacturer, and provider of e-commerce services. It boasts an extensive network of food stores (975) and drugstores (645). At $68.53 per share, the dividend offer is a decent 1.77%.
In the 12 months that ended September 30, 2023, sales and net earnings increased 9.7% and 19.9% respectively to $20.7 billion and $1 billion versus fiscal 2022. In Q4, sales and net earnings climbed 14.4% and 31.7% year over year to $5 billion and $222.2 million. “For the first time in our history, sales for the year exceeded $20 billion, and net earnings reached $1 billion,” said Eric La Flèche, Metro’s President and CEO.
La Flèche adds that the new state-of-the-art automated distribution center for fresh and frozen products is a key milestone in Metro’s modernization of its supply chain. Besides improving the services in stores, the facility should fuel long-term growth.
Compelling options
Safe is an understatement if the dividend track record is your primary consideration. RBC started paying dividends in 1870 and continues to the present (153 years already). At the end of Q4 fiscal 2023, the company announced a 2% dividend hike.
If you invest today ($123.25%), you can feast on the 4.49% dividend. Metro Inc. is the second-best option because you can buy the stock and hold for the long term.
