Although the TSX is really performing nicely so far in 2024, there are those of us who are still worried. Higher interest rates, an over-extended consumer, and a general feeling that stocks are stretched have left us feeling concerned. Here are three safe stocks to buy to address this.
TD Bank: Harnessing the safety of Canadian banks
Canadian banks are the epitome of safety. While there will always be headwinds to deal with, the banks always end up on top. Armed with a strong capital position, a diverse business, and operational excellence, Toronto-Dominion Bank (TSX:TD) is the best of the best.
In the long run, TD Bank has performed exceptionally well. Driven by a robust economic environment, a growing population, and its expansion efforts, the bank has created significant value. All the while, TD Bank’s stock price has been rising, and its dividend payments keep coming.
But there are certainly some real challenges to contend with in the short term. For example, the consumer is at risk due to rising interest rates, and this is negatively affecting Canadian banks. With this in mind, I still view TD Bank as a safe stock to own for the long term. Choose your entry point, but I don’t think you’ll go wrong owning this one for safety.
Fortis: Safety at its best
Utilities are the other category known for their safety. The business benefits from being an essential one, one that consumers don’t have the option of going without. This is what makes utility companies like Fortis (TSX:FTS) safe.
But Fortis has other company-specific factors that also contribute to its safety profile. For example, Fortis is a $26.1 billion utility giant with a diverse geographic footprint and asset mix. This means that the company has a diversified revenue profile that’s regulated. In turn, this translates into steady, secure, and predictable revenue — qualities that are highly valuable.
Also, Fortis stock has seen its dividend increase for 50 consecutive years. In the last 20 years, the company has increased its annual dividend by 354% to the current $2.26 per share. This equates to a compound annual growth rate (CAGR) of 7.86%. Looking ahead, the dividend is expected to grow at 4-6% through to 2028.
As Canada’s leading telecom giant, BCE (TSX:BCE) really holds a position of power. Barriers to entry in the telecom industry are high, and BCE’s competitive advantage is meaningful within the current competitive landscape.
For example, BCE has invested billions of dollars into its network. This network has the fastest and farthest-reaching broadband internet connection. Also, BCE has a leading position in fibre optics, which is expanding rapidly, as well as in 5G, which is on track to grow to 85% penetration in Canada. All of this will ensure that the company maintains its edge for years to come.
Finally, BCE’s dividend history illustrates its safety profile. With 40 years of dividend payments under its belt and a 5% or higher dividend increase in each of the last 15 years, BCE has an enviable dividend track record. This demonstrates the predictability, reliability, and safety of the underlying business.