Investing in Canadian consumer staples stocks during uncertain times can be a solid move for several reasons. Consumer staples tend to have stable demand as people continue to buy these products even during economic downturns. They are considered essential, so their sales are less likely to fluctuate drastically compared to discretionary items. Thanks to the stable demand, consumer staples stocks are a defensive investment.
Further, many of these companies have solid fundamentals and a strong track record of distributing regular dividends, which adds an element of reliability for those focused on generating consistent income. Beyond their defensive characteristics, consumer staples stocks often offer the potential for long-term capital appreciation. The combination of stability, dividends, and steady growth makes them valuable to any balanced investment strategy.
With this background, here are the top Canadian stocks among consumer staples stocks to buy for uncertain times.
Source: Getty Images
Consumer staples stock #1
Investors seeking top consumer staples stocks could add Loblaw (TSX: L) to their portfolios. This Canadian blue-chip company is known for delivering stability, growth, and regular income. For instance, this leading food and pharmacy company’s defensive business model, steady demand, and consistent growth support its earnings, dividend payments, share buybacks, and stock price.
Given the retailer’s solid financial performance, Loblaw stock grew at a compound annual growth rate (CAGR) of 22.9%, delivering overall capital gains of 181.8% over the past five years. Moreover, it generated solid free cash flow and rewarded its shareholders with higher dividends and share repurchases.
Looking ahead, the momentum in Loblaw’s business will likely sustain regardless of economic conditions. The expansion of its hard discount stores, diverse product range, and value pricing strategy will continue to drive traffic across various economic conditions. This will support its future sales and earnings growth and, in turn, its dividend payouts.
Loblaw will also benefit from expanding its omnichannel offerings and the growing penetration of its private-label brands. Further, its focus on modernizing and automating the supply chain and optimizing its retail network augurs well for long-term growth.
Consumer staples stock #2
Alimentation Couche-Tard (TSX: ATD) is another top Canadian consumer staples stock to buy and hold for stability, income, and growth. It operates convenience stores, supplies fuel, and offers electric vehicle (EV) charging. The convenience retailer’s diversified business model enables it to generate solid revenue and earnings.
Looking ahead, Couche-Tard is likely to benefit from an expanding range of private-label products. Notably, these products resonate well with value-conscious consumers and support the company’s margins. Moreover, Couche-Tard’s strategic acquisitions and growing footprint will further accelerate its growth.
Further, the company’s EV charging business provides another avenue for growth. The company’s focus on expanding its network and improving utilization rates will support the segment’s growth.
Notably, Couche-Tard’s total revenue and adjusted earnings have grown at a CAGR of 6.2% and 15.2%, respectively, over the past decade. Moreover, Couche-Tard’s dividend increased at a CAGR of 25.6% during this period.
Overall, its ability to drive sales and earnings, strong balance sheet, and capacity to invest in future growth initiatives position it well to deliver steady returns in the long term.
