Investors should focus on creating a diversified portfolio of quality stocks, lowering their risk significantly. Ideally, investors need to pick fundamentally strong stocks that are equipped to generate cash flows and earnings across market cycles.
Here are three top TSX stocks investors can consider buying in December 2023.
Royal Bank of Canada stock
The largest TSX stock in terms of market cap, Royal Bank of Canada (TSX:RY) is valued at $166 billion. Down 20% from all-time highs, RBC stock currently offers shareholders a tasty dividend yield of 4.6%.
While RBC is part of the highly cyclical banking sector, its conservative lending approach and strong liquidity position have allowed it to maintain dividend payouts across business cycles. In the last 20 years, the TSX giant has raised dividends by more than 7% annually, which is exceptional for a bank stock.
In fiscal Q3 2023 (ended in July), RBC reported net income of $4 billion, or $2.84 per share, an increase of 11% year over year. Its Q4 results reflected higher provisions for credit losses with a PCL on loans ratio of 29 basis points.
Despite a challenging macro environment, RBC managed to increase its net income due to higher revenue in verticals such as corporate and investment banking. Moreover, higher interest rates resulted in an uptick in net interest income and strong volume growth in deposits.
Priced at less than 11 times forward earnings, RBC stock trades at a discount of 12% to consensus price target estimates.
Canadian Tire stock
One of the most popular retail giants in the country, Canadian Tire (TSX:CTC.A) offers shareholders a dividend yield of more than 5%.
While Canadian Tire sales were down 1.6% in Q3, revenue from essential products was up 4% compared to the year-ago period. To offset a sluggish economic environment, Canadian Tire has reduced capital expenditure expenses to $176.4 million in Q3, compared to $231.7 million in the prior-year period.
The TSX company also announced it would reduce its full-time employee count by 3%, resulting in annualized cost savings of about $50 million.
Moreover, Canadian Tire increased its dividends for the fourteenth consecutive year and now pays investors an annual dividend of $7 per share.
Analysts remain bullish and expect CTC stock to gain 15% in the next 12 months.
Jamieson Wellness stock
The final TSX stock on my list is Jamieson Wellness (TSX:JWEL), a company that operates in the natural health products space. JWEL stock trades 30% from all-time highs and offers you a dividend yield of 2.6%. Despite the pullback, the company has returned 90% to shareholders in dividend-adjusted gains in the last six years.
In Q3 2023, Jamieson Wellness increased revenue by 9.1% to $151.5 million due to 15% growth in Jamieson Brands. Its top line grew due to sustained consumer engagement in domestic markets where consumption outpaced shipments.
Additionally, new product launches, and e-commerce and distribution gains in the U.S. drove sales in the September quarter. The company also continued to experience momentum in China under an owned-distribution model.
Jamieson Wellness ended Q3 with a leverage ratio of 2 times and more than $222 million in total liquidity.
Priced at 15.2 times forward earnings, Jamieson Wellness trades at a discount of 30% to consensus price target estimates.