The TSX today is a bit wobbly, but investors have hope. The TSX recently passed its highest levels since 2022, marking a turning point for investors looking to get back in. And while it’s recently come down slightly, overall it’s likely the market will continue to trade higher.
This is why now is the time to get back into consumer staples stocks. These are likely to be one of the first areas to recover as the market turns around. Why? Let’s get into it, and some of the best stocks to consider.
Why consumer staples?
There are multiple reasons why investors will want to consider consumer staples stock at this time. During market recovery, consumer staples stocks offer essential goods like food, beverages, and household items. These are necessities, regardless of an economic situation, providing a defensive nature to your investment.
Furthermore, these items also see steady demand, even during these volatile times. We need food in our house no matter what, and that’s not going to change. Therefore, these items will continue to be sold at a steady click.
More than that, this steady income also means steady dividend income in many cases. Many consumer staples stocks have a history of paying dividends, with reliable cash flows to support growth. They can also provide a hedge against inflation since they produce necessities and have the ability to pass on cost increases to consumers through price adjustments. So, which should investors consider?
North West
Now, it’s likely that you’re going to first and foremost think of grocery chains. And that’s definitely fair. However, what if there was a company that provided essential grocery chains but was also the only option?
That’s what North West Company (TSX:NWC) has achieved. The retailer serves rural and remote communities in Canada, Alaska, and the Caribbean. The stock offers food, general merchandise, and services through various banners. And it’s usually one of if not the only option for consumers to use, even during these tough times.
NWC stock has therefore remained at a steady clip even during this volatile market. And that means it could be ahead of the rest when it comes to expanding in a strong market. Meanwhile, it holds a strong 3.97% dividend yield, with shares surging since September, up by 34% in that time and climbing for investors getting in on it now.
Metro
But let’s go back to grocery chains and those that support some of the biggest in Canada. One of those companies is Metro (TSX:MRU), with a variety of grocery options for its consumers. In fact, it usually has multiple options right in the same location for Canadians to consider.
What’s more, Metro stock also offers pharmacies on location, and continues to expand its offerings and locations. The company has now become a diversified business beyond traditional grocery retailing. it also operates distribution centres, and food processing facilities. This allows it to control its supply chain and ensure product quality and availability.
Furthermore, the company has delivered stable and strong financial results, with steady revenue growth, all while maintaining a steady, if low, 1.83% dividend yield. So, with shares up 9% since the market bottom back in October, it’s another consumer staples stock I would certainly consider today.
