Canadian equity markets have become volatile over the last few weeks amid growing geopolitical tensions and rising bond yields. Investors also fear that the Federal Reserve of the United States will not cut interest rates sooner, as inflation is not easing as quickly as anticipated. Given this uncertain outlook, investors should look to balance their portfolios with growth, defensive, and dividend stocks. Meanwhile, here are my three top picks.
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Waste Connections
Waste Connections (TSX: WCN) is a prudent defensive stock to have in your portfolio, given its solid historical performance and growth prospects. The solid waste management company operates primarily in secondary and exclusive markets and, therefore, faces lesser competition and enjoys higher margins. Due to the essential nature of its business and continued acquisitions, the company has been posting solid financials irrespective of the macro environment. It has delivered a total shareholders’ return of over 6,600% since going public in 1998.
Continuing its acquisitions, WCN acquired 30 energy waste treatment and disposal facilities from Secure Energy Services for $1.1 billion in February. The company is also expanding its renewable natural gas and resource recovery facilities and plans to invest around $150 million this year. These initiatives could boost its financials in the coming years. Also, WCN stock has been raising its dividend since 2010 at an annualized rate of 14.3%. Considering all these factors, I believe WCN would be a worthy addition to your portfolio.
Docebo
Docebo (TSX: DCBO) is one of the top growth stocks to have in your portfolio due to its solid financials, growing customer base, and expanding addressable market. Supported by its highly configurable and personalized learning platform, the company has increased its customer base from 900 in 2016 to 3,759 by the end of 2023. Also, the average contract value has quadrupled to around $52,000 during the same period.
Meanwhile, the LMS (learning management systems) market is expanding amid digitization and growth in remote working and learning, thus creating multi-year growth potential for Docebo. The company completed the acquisition of PeerBoard and Edugo last year. PeerBoard’s acquisition has expanded its external training offerings and enhanced its social learning capabilities. Meanwhile, Edugo’s acquisition could enhance its AI (artificial intelligence) capabilities. So, the company is well-positioned to benefit from the market expansion. Also, many of its clients have signed multi-year agreements, stabilizing its financials.
Enbridge
My final pick would be Enbridge (TSX: ENB), which has been paying dividends uninterruptedly for 67 years and also increased its dividends for the previous 29 years. The midstream energy company that transports oil and natural gas across North America earns around 98% of its adjusted EBITDA from regulated assets and long-term contracts. So, its financials are less susceptible to market volatility, thus allowing it to reward its shareholders with consistent dividend growth. Currently, the company pays a quarterly dividend of $0.915/share, with its forward dividend yield at 7.49%.
Meanwhile, Enbridge acquired East Ohio Gas Company last month, which serves around 1.2 million customers in Ohio. Besides, the energy firm is working on acquiring two other natural gas utility assets in the United States, which could make it the largest natural gas utility company in North America. Further, the company is continuing with its $24 billion secured capital program and hopes to put around $4 billion of assets into service annually in 2024 and 2025. These growth initiatives could boost its cash flows, thus making its future dividend payouts safer. So, I am bullish on Enbridge.
