Low-volatility stocks are less susceptible to market volatility, thus delivering stable returns irrespective of the broader market conditions. These stocks help stabilize investors’ portfolios and are in high demand in a volatile environment. Against this backdrop, let’s look at three low-volatility TSX stocks with consistent returns.
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Waste Connections
Waste Connections (TSX: WCN) would be an excellent defensive bet due to the essential nature of its business. The waste management company collects, transfers, and disposes of non-hazardous solid waste. With its operations primarily in secondary and exclusive markets, it faces lesser competition and enjoys higher margins. Besides, the company has expanded its footprint through organic growth and strategic acquisitions, thus boosting its financials and stock price. Over the last 10 years, WCN has delivered 490% returns at an annualized rate of 19.5%.
Meanwhile, the Toronto-based waste management company continues expanding through organic growth and acquisitions. The company is developing 12 renewable natural gas facilities and expects them to become operational next year. These facilities could generate $200 million in additional annualized EBITDA (earnings before interest, tax, depreciation, and amortization). Also, the company adopted technological advancements to improve efficiency and employee safety. Besides, its improved employee engagement has resulted in lower employee turnover, thus improving its operating margins. Considering all these factors, I am bullish on WCN.
Fortis
Another low-volatility stock you can consider is Fortis (TSX: FTS), which operates a regulated, low-risk utility business. The company meets the natural gas and electric needs of 3.5 million customers across Canada, the United States, and the Caribbean. With 99% of its assets regulated, the company’s financials are less prone to market volatility, thus generating stable and predictable cash flows. Supported by these healthy cash flows, the company has been raising its dividends for the previous 51 years and currently offers a healthy forward yield of 4%.
Moreover, Fortis is expanding its asset base with its $26 billion capital investment plan, which could grow its rate base at an annualized rate of 6.5% to $53 billion by the end of 2029. Along with these investments, the company’s initiatives to improve operating efficiency and favourable rate revisions of its rate-regulated businesses could continue to drive its financials in the coming quarters. Amid these growth initiatives, management projects to raise its dividends by 4–6% annually through 2029, thus making it an ideal buy.
Dollarama
Dollarama (TSX: DOL) operates 1,601 stores across Canada, with 85% of Canadians having at least one store within 10 kilometres of their surrounding area. The company’s superior direct sourcing and effective logistics allow it to offer various consumer products at attractive prices. So, it enjoys healthy same-store sales even during a challenging macro environment.
Moreover, Dollarama has a solid expansion plan and expects to increase its store count to 2,200 by the end of fiscal 2034. Given its capital-efficient business model, quick sales ramp-up, and lower maintenance expenses, these expansions could boost its top and bottom lines. Besides, the discount retailer owns a 60.1% stake in Dollarcity, which owns and operates 588 stores across Latin America. Meanwhile, Dollarcity has planned to increase its store count to 1,050 by the end of fiscal 2031. Also, Dollarama owns an option that will allow it to increase its stake in Dollarcity to 70% by the end of fiscal 2027. Given its solid underlying business and healthy growth prospects, I am bullish on Dollarama.
