The 5 Best Low-Risk Stocks for Canadians

These low-risk Canadian stocks will likely add stability to your portfolio and have the potential to deliver decent capital gains and dividends over time.

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Investing in stocks always comes with risks, as no stock is 100% safe. However, shares of some companies are relatively less volatile and carry low risk, offering more stability and security to your investment portfolio.

Low-risk stocks are shares of companies that can defend and grow their market share and consistently deliver solid earnings, regardless of economic situations. Fortunately, the TSX has several fundamentally strong stocks with a low-risk profile that can provide impressive capital gains and dividends. 

Against this background, the following are five Canadian stocks with low-risk and solid growth prospects.

Stock #1

Investors seeking low-risk stocks could consider adding Loblaw (TSX:L) to their portfolio. Loblaw is Canada’s largest food and pharmacy retailer. The retailer’s discount stores, wide product offerings, and inflation-fighting price freeze enable Loblaw to consistently generate solid comparable sales, making its stock less volatile in economic downturns. 

Despite its low-risk business, Loblaw stock has grown at a compound annual growth rate (CAGR) of about 21% in the past five years. Moreover, it paid higher dividends and enhanced shareholders’ returns through share repurchases. Its value pricing strategy, defensive business model, and focus on increasing the penetration of private-label food products position Loblaw well to deliver solid returns with low risk. 

Stock #2

Within the retail sector, investors could also consider shares of convenience store operator Alimentation Couche-Tard (TSX:ATD). The company’s defensive business model, ability to grow rapidly, and ability to enhance shareholders’ value through higher dividend payments make it a compelling investment. 

Couche-Tard stock has grown at a CAGR of 14.6% in the last five years, delivering a capital gain of about 98%. Further, its dividend sports a 10-year CAGR of 26.6%. The firm’s focus on value pricing, growing store base, and cost-saving initiatives will drive solid organic growth. Moreover, its focus on accretive acquisitions will likely bolster its footprint and accelerate its growth rate. 

Stock #3

Shares of Canadian National Railway (TSX:CNR) are a dependable choice for investors seeking low-risk investments. It operates a transportation business and offers shipping through rail. CNR is a defensive stock that has grown at a CAGR of more than 12% in the past decade. Besides offering stability and decent capital gains, the company has enhanced its shareholders’ returns and increased its dividend at a CAGR of nearly 14% since listing on the exchange in 1995. 

The company’s low-risk business model and well-diversified portfolio position it well to generate steady revenues. Additionally, its focus on improving operating efficiency safeguards its earnings and dividend payouts. Moreover, Canadian National Railway’s essential role in the economy as a provider of crucial transportation services adds an extra layer of stability to its overall performance.

Stock #4

Fortis (TSX:FTS) presents an appealing option for investors seeking low-risk opportunities. With a focus on regulated electric utility services, the company offers stability in all market conditions. Its diversified asset portfolio ensures steady cash flows, supporting growth endeavours and consistent dividend payouts.

Fortis’s rate base is forecasted to grow at a CAGR of 6.3% through 2028. This will expand its earnings base and enable the company to distribute higher dividends. The company expects to increase its dividend by 4-6% per year through 2028, while its stock could continue to grow at a decent pace. 

Stock #5

Leading Canadian banks could be a valuable addition to your low-risk portfolio. Investors could consider Bank of Montreal (TSX:BMO) within the banking space. The financial services company benefits from its diversified revenue sources, strong balance sheet, ability to grow loans, high-quality deposit base, and operating efficiency. 

Bank of Montreal has been consistently growing its earnings, allowing it to pay uninterrupted dividends for an impressive 195 years. The bank is well-positioned to grow its earnings at a high single-digit rate in the coming years, which will likely support its shares and payouts. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy.

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