Investors’ expectations that easing inflationary pressures and declining interest rates could boost economic activity and lead to improved corporate earnings have fueled a sharp rally in Canadian stocks. As a result, the TSX Composite has gained over 25% over the last 12 months.
While this rally reflects renewed confidence in the market, it also brings elevated risks, particularly for stocks with stretched valuations. For cautious investors, this environment also calls for a focus on safe stocks with strong balance sheets, stable earnings, and a proven track record of weathering economic cycles.
If you’re looking for such stocks, here are two safe Canadian companies that stand out for their stability and reliable performance, irrespective of short-term market fluctuations.
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Dollarama stock
Speaking of safe stocks in Canada, it’s hard to overlook Dollarama (TSX:DOL). This Mont Royal-based company, with a market cap of $39.9 billion, operates a large chain of over 1,600 discount stores across Canada. Its stock currently trades at $142.23 per share after surging by 49% so far in 2024.
The very fact that Dollarama stock has delivered strong double-digit returns in 13 out of the last 15 years speaks volumes about its resilience and ability to consistently generate value for investors.
Dollarama’s resilience mainly lies in its business model, which gives it the ability to adapt and thrive even during uncertain economic conditions. In the third quarter (ended in October 2024 of its fiscal year 2025), the company’s total revenue rose 5.7% YoY (year over year) to $1.56 billion with the help of new store openings and a 3.3% rise in its comparable same-store sales. Even as consumer spending remained cautious, its discount retail stores continued to attract customers with value-oriented products.
Recently, Dollarama also revised its long-term growth plans, increasing its target to 2,200 stores across Canada by 2034, up from the previous goal of 2,000 stores by 2031. This decision reflects the management’s confidence in the company’s ability to benefit from the growing demand for affordable retail options, which makes it a very reliable Canadian stock for cautious investors.
Enbridge stock
Enbridge (TSX:ENB) is another trustworthy name in the Canadian stock market, and it has an outstanding track record of consistently yielding positive returns for investors. It currently has a market cap of $130.7 billion as its stock trades at $59.97 per share with about 26% year-to-date gains. This energy infrastructure giant also offers an impressive 6.3% annualized dividend yield.
In the last 12 months ended in September 2024, Enbridge’s total revenue rose 6.1% YoY to $48.6 billion, while its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed by 8.2% YoY to $17.6 billion. The company now expects to reach close to the top end of its full-year 2024 EBITDA guidance range of $17.7 billion to $18.3 billion.
In addition to its huge network of liquids pipelines and natural gas distribution portfolio, Enbridge has increased its focus on crude oil export and renewable energy projects. As the company continues to pursue the diversification of its revenue streams, it is positioning itself as a well-rounded energy player with future growth opportunities in both traditional and renewable energy sectors. These efforts, coupled with its reliable dividends, make ENB a safe long-term stock for conservative investors.
