The TSX achieved several records in September, which was generally a weak month for stocks. Besides a 2.7% month-on-month gain, Canada’s headline equity index gained nearly 9% in the third quarter (Q3) of 2024 and is up in nine of the past 11 months.
However, will volatility heighten in the last quarter because of political uncertainties, notably the coming U.S. presidential elections? A pullback is a natural occurrence in the stock market due to several factors. However, some stocks are more resilient than others during a down market.
If you want your investment portfolio to hold firm, buy shares of National Bank of Canada (TSX: NA) and North West Company (TSX: NWC). The companies have gone through economic downturns but have endured them. Both dividend stocks also outperformer entering October.
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Stronger banking choice
The latest buzz on National Bank is that it has received clearance from the Canadian Competition Bureau to take over Canadian Western Bank. However, Canada’s sixth-largest bank needs the Office of the Superintendent of Financial Institutions and the Minister of Finance to approve the proposed transaction in order to proceed.
According to Laurent Ferreira, president and chief executive officer (CEO) of National Bank, the $5 billion deal will bring together two great banks and deliver a stronger banking choice for all Canadians and Canadian businesses. For Chris Fowler, CEO of CWB, the decision of the antitrust regulator preserves the tremendous value the transaction represents for all stakeholders.
The $43.5 billion bank expects to obtain the three approvals and complete the acquisition of CWB in early 2025. In Q3 and the first nine months of fiscal 2024, NA’s net income increased 24% and 13% year over year to $1.03 billion and $2.86 billion, respectively.
Ferreira credits the bank’s diversified earnings mix and solid credit profile for the strong financial results in the third quarter. “With our prudent approach to capital, credit, and costs, we remain well-positioned in a complex macro environment, and we look forward to the growth opportunities ahead,” he added.
NA said acquiring a full-service bank like CWB aligns with its strategic plan to accelerate business growth. Performance-wise, the big bank stock is up 30.13% year to date. At $127.74 per share, the dividend yield is a decent 3.44%.
Natural economic MOAT
North West Company, a defensive consumer staples stock, is ideal for risk-averse investors. The $2.45 billion company is one of Canada’s oldest retail enterprises. It caters to underserved markets in western provinces and remote, hard-to-reach northern territories.
Because of limited competition, NWC has a natural economic moat and boasts pricing power and profitability. In the first half of fiscal 2024 (six months ending July 31, 2024), sales and net earnings increased 4.1% and 5.9% to $1.26 billion and $64.1 million.
As of September 30, 2024, the share price is $51.33. Current investors enjoy a 34.3% year-to-date gain on top of the 3.12% dividend (2.6% dividend hike recently). Like NA, NWC pays quarterly dividends.
Resilient holdings
National Bank of Canada and North West Company are among the most resilient stocks you can own. The bank is turning a new leaf, while the retailer will continue with its rich, enterprising legacy.
