U.S. President Donald Trump started his second term in office with tariff threats against trading partners, including its next-door neighbours. His latest executive order is a 25% import tax on all foreign steel and aluminum products. Canada exports both metals to the U.S.
Catherine Cobden, head of the Canadian Steel Producers Association, warned that Trump’s drastic measures could hit various sectors. A potential full-blown trade war spooks investors because it will heighten volatility and could result in a market pullback.
Sectors like energy and materials might experience a fallout, while some companies in the consumer discretionary sector are vulnerable to tariffs or could face headwinds. So, if you’re worried about Trump’s tariffs, you can invest in two resilient TSX stocks for capital protection and healthy returns. A longer investment horizon should also help you counter or ride out market downswings.
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Defensive portfolio
Crombie (TSX: CRR.UN), a $2.5 billion real estate investment trust (REIT), owns and operates grocery-anchored retail, retail-related industrial, and residential assets. The necessity-based portfolio generates stable cash flows. Empire Company Limited, an iconic Canadian conglomerate and food retailer, owns 41.5% of the REIT.
The well-positioned defensive portfolio is a competitive advantage because it provides long-term earnings and cash flow stability. Besides the 8.6 years weighted average lease term (WALT), the long-term leases contribute to portfolio stability. The residential and retail-related industrial real estate improves overall portfolio quality and growth.
Only 26.2% of the leases will mature over the next five years. The WALT of Empire, its anchor tenant in 89% of the retail properties, is 11 years. At the end of Q3 2024, Crombie’s value-enhancing major development pipeline consists of three near-term and 23 medium- to long-term development projects.
In the nine months ending September 30, 2024, net property income increased 5.7% year-over-year to $223.5 million. The committed occupancy rate is 91.6%. Its President and CEO, Mark Holly, said, “Crombie’s performance demonstrates the resilience of our coast-to-coast, necessity-based portfolio, and our focus on our value creation strategy of delivering consistent healthy operational and financial results.”
It is our solid foundation, including our strong financial condition and dedicated team, that allows us to seize opportunities and advance key priorities to create long-term sustainable growth for our Unitholders,” Holly added. If you invest today, Crombie trades at $13.82 per share (+5.2% year-to-date) and pays a hefty 6.4% dividend yield.
Double the business size
Information Services Company (TSX: ISC) flies under the radar but is unaffected by Trump’s tariffs. The $489.9 million company provides registry and information management services for public data and records in Canada. This 25-year-old firm focuses on sustaining its core business while pursuing new growth opportunities.
Its President and CEO, Shawn Peters, said last month, “2024 is expected to be another record-breaking year for ISC as we commenced our mission to double the size of our business by 2028. From launching transformative solutions to strengthening our global footprint, ISC has demonstrated resilience and ambition in delivering value to stakeholders.”
This year is the second year of the three-year growth plan. ISC’s average net income in the last three years is $29.3 million. At $26.58 per share, investors can partake in the 3.5% dividend yield.
Safer investments
The trading relationship between Canada and the U.S. will sour if Trump makes good his threat to impose tariffs. Meanwhile, Crombie and ISC are safe from tariffs, although not immune from a broad-market retreat.
