Supported by the post-election rally, the S&P/TSX Composite Index touched a new high yesterday and is up 19.5% this year. The expectations over President-elect Donald Trump’s pro-growth policies have improved investors’ optimism, driving the equity markets. However, several uncertainties exist, such as a global economic slowdown and the impact of Trump’s 10% universal tariff on Canadian companies. So, if you are also worried about these uncertainties, here are three safe stocks you can buy to stabilize your portfolios.
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Hydro One
Hydro One (TSX: H) is a pure-play electricity transmission and distribution company with a 99% rate-regulated business. It has no material exposure to commodity price fluctuations. Besides, the company has expanded its rate base at an annualized rate above 5% since 2018, driving its financials. Along with these growth initiatives, the company has adopted several cost-cutting initiatives, leading to $1.5 billion in savings since 2016.
Moreover, Hydro One is continuing with its $11.8 billion capital investment plan that will increase its rate base at an annualized rate of 6% to $31.8 billion by the end of 2027. Along with these expansions, favourable rate revisions and cost-cutting initiatives could boost its financials in the coming years. Meanwhile, management expects its EPS (earnings per share) to grow at a CAGR (compound annual growth rate) of 5–7% through 2027. Moreover, management is confident of raising its dividends at an annualized rate of 6%, while its forward dividend yield currently stands at 2.9%. Its regulated business, healthy growth prospects, and dividend growth projections would make Hydro One an ideal addition to your portfolio.
Waste Connections
Waste Connections (TSX: WCN) is a waste management company that operates in secondary and exclusive markets across the United States and Canada. Given the essential nature of its business, the company generates stable financials, irrespective of the broader market conditions. Also, it has been expanding its footprint through organic growth and strategic acquisitions, thus boosting its financials and stock price. Over the last 10 years, the company has delivered around 510% returns at an annualized rate of 19.8%.
Moreover, the waste solutions provider invests in developing renewable natural gas and resource recovery facilities, with 12 developmental projects that could become operations in 2026. Besides, the company is progressing with its strategic acquisitions, with the management projecting the acquisitions completed this year to contribute around $700 million to 2024 revenue. Also, it has adopted innovative employee engagement initiatives, leading to higher employee retention and improved margins. So, its growth prospects look healthy.
Further, investors could benefit from WCN’s consistent dividend growth, with the company raising its dividends at a 14% CAGR since 2010. Considering its solid underlying business, healthy growth prospects, and consistent dividend growth, I am bullish on WCN despite the uncertain broader market conditions.
Dollarama
Dollarama (TSX: DOL) would be my final pick. Supported by its unique direct-sourcing method and efficient logistics, the company offers various consumer products at attractive prices, thus enjoying healthy same-store sales even during a challenging macro environment.
Moreover, the discount retailer is expanding its store network by opening 60–70 stores annually, thus increasing its store count to 2,000 by the end of fiscal 2031. Given its efficient capital model, swift sales ramp-up, and a lower average payback period, these expansions could boost its top and bottom lines. Further, the company has a solid presence in the Latin American retail space, with a 60.1% stake in Dollarcity. Meanwhile, Dollarcity has plans to add 480 more stores over the next six years. Also, Dollarama owns an option to increase its stake in Dollarcity by 10%. Given its healthy growth prospects, I expect the uptrend in Dollarama’s financials and stock price to continue.
