Trump's Tariffs Could Hurt Your TFSA – But These 2 Stocks Will Keep it Safe

Trump’s Tariffs Could Hurt Your TFSA – But These 2 Stocks Will Keep it Safe

Worried about tariffs coming down? Then consider these two stocks to keep your portfolio safe.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 7, 2025 5:00 pm EST

In the ever-evolving world of investments, it’s essential to keep a keen eye on global events that could impact your Tax-Free Savings Account (TFSA). One such event is the imposition of tariffs by former U.S. President Donald Trump, which may have ripple effects on various sectors. But fear not! Utility and grocery stocks, known for their resilience during economic uncertainties, can be your TFSA’s best friends. Let’s delve into why Hydro One (TSX:H) and Loblaw Companies (TSX:L) are must-haves in your portfolio.

During times of economic uncertainty, consumers prioritize essential services and goods. Utilities ensure our homes are powered, and grocery stores keep our pantries stocked. This consistent demand makes companies like Hydro One and Loblaw less susceptible to economic downturns, offering investors a cushion against market volatility.

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement. — Source: Getty Images

Hydro One

Hydro One is Ontario’s largest electricity transmission and distribution provider, serving nearly 1.5 million customers. Its operations are predominantly rate-regulated, ensuring stable and predictable revenue streams. In the third quarter of 2024, Hydro One reported net income attributable to common shareholders of $371 million, up from $357 million in the same period of 2023. This resulted in earnings per share (EPS) of $0.62, compared to $0.60 the previous year.

The Canadian stock’s commitment to infrastructure investment is evident in its 2023–2027 Investment Plan, aiming to reduce power outages, renew critical infrastructure, and prepare for climate change. Such initiatives not only enhance service reliability but also position Hydro One for long-term growth.

Loblaw

Loblaw Companies stands as Canada’s largest grocer, boasting a diverse portfolio of brands including No Frills, Provigo, and Real Canadian Superstore. In the third quarter ending October 7, 2024, Loblaw reported revenue of $18.3 billion, marking a 5% increase from the prior year. Net earnings grew to $621 million, or $1.95 per share.

While there was a noted slowdown in non-essential goods like household items and electronics, Loblaw’s discount banners such as No Frills and Maxi experienced heightened demand. This shift underscores the Canadian stock’s adaptability and its pivotal role in providing essential goods, especially during economic downturns.

Looking ahead

Hydro One’s recent financial performance showcases its resilience. It continues to invest in Ontario’s electricity infrastructure, with capital investments of $773 million during the third quarter of 2024. These strategic investments are poised to support economic growth and the transition to a clean energy future.

Loblaw, on the other hand, has demonstrated adaptability in its operations. Despite challenges in discretionary spending, the Canadian stock’s focus on essential goods and discount offerings has bolstered its position in the market. This strategy not only caters to cost-conscious consumers but also ensures steady revenue streams.

Both Hydro One and Loblaw also offer attractive dividends, providing investors with regular income. Hydro One declared a dividend of $0.3142 per share quarterly, reflecting its commitment to returning value to shareholders. Loblaw’s consistent dividend payouts further enhance its appeal as a stable investment choice.

Foolish takeaway

Incorporating utility and grocery stocks into your TFSA can provide a solid foundation, especially amidst global trade uncertainties. Hydro One and Loblaw, with their essential service offerings and robust financial health, stand out as prudent choices for investors seeking stability and growth.

While no investment is entirely risk-free, focusing on sectors that offer essential services can mitigate potential downturns. Hydro One and Loblaw have proven their mettle in challenging times, making each worthy considerations for safeguarding your TFSA against external economic shocks. By staying informed and strategically selecting investments, you can navigate the complexities of the market and ensure your portfolio remains resilient, regardless of global economic shifts.