Tariff risks are heating up again, putting pressure on industries that rely on international trade. With ongoing trade tensions between Canada and the United States, investors may need to rethink their strategies. The U.S. recently imposed a 50% tariff (up from 25%) on Canadian steel and aluminum, prompting Canada to respond with its own tariffs on American imports. These trade disputes can disrupt supply chains, increase costs for businesses, and make certain sectors more volatile.
For investors, this kind of uncertainty can be nerve-wracking. Companies with significant exposure to international trade could see profits shrink if they rely on imported goods or foreign sales. When tariffs are in play, companies that generate most of their revenue within Canada and don’t depend heavily on cross-border trade tend to be safer bets. Investors looking for stability might consider companies that focus on the domestic market. Three TSX-listed stocks fit this bill: Rogers Communications (TSX: RCI.B), Hydro One (TSX: H), and Loblaw Companies (TSX: L).
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Rogers
Rogers Communications is one of the country’s largest telecom providers, offering wireless, internet, and cable TV services across Canada. Because it operates almost entirely within the country, it doesn’t have to worry about global supply chain disruptions or shifting trade policies. While telecom companies do import some equipment, the overall business model remains largely unaffected by tariffs.
In its most recent earnings report, Rogers showed resilience. It reported fourth-quarter 2024 adjusted diluted earnings per share (EPS) of $1.46, up from $1.19 in the same quarter of 2023. Revenue reached $4.5 billion, reflecting a 5% year-over-year increase. The company’s steady performance highlights the strength of its domestic business model. As more Canadians continue to upgrade to 5G and demand for internet services rises, Rogers remains in a strong position regardless of what happens with tariffs.
Hydro One
Hydro One is Ontario’s largest electricity transmission and distribution company, making it a solid option for investors seeking stability. The utility sector tends to be less impacted by trade disruptions because electricity is a domestic necessity. Hydro One’s revenue comes from providing power to homes and businesses within Ontario, keeping it well-insulated from trade wars.
In its fourth-quarter 2024 earnings report, Hydro One reported basic EPS of $0.33, up from $0.30 the year before. Its total revenue for the quarter was $2.1 billion, a steady increase that demonstrates its strong footing. Since utility companies operate under government regulation, Hydro One benefits from consistent demand and predictable pricing structures. This makes it a safer investment in times of trade uncertainty.
Loblaw
Loblaw Companies is Canada’s largest grocery and pharmacy retailer, with a network of supermarkets and drugstores spread across the country. Unlike manufacturers that rely on global supply chains, Loblaw mainly sources and sells its products domestically. Even when tariffs affect international goods, consumers still need groceries and healthcare products, making Loblaw a resilient business.
In the fourth quarter of 2024, Loblaw reported adjusted diluted net EPS of $2.20, a 10% increase from the previous year. Revenue came in at $14.5 billion, reflecting continued consumer demand for essentials. As the cost of living rises, more Canadians are turning to discount grocery options, a segment where Loblaw dominates. This defensive positioning helps the company maintain strong financials despite external economic pressures.
Foolish takeaway
Investors worried about market volatility should also consider dividend-paying stocks, as these can provide consistent income even in uncertain times. Both Hydro One and Rogers offer dividends, making them appealing options for income-focused investors. Hydro One’s dividend yield currently sits at around 3.2%, while Rogers offers a yield of approximately 3.4%. While Loblaw’s dividend is lower at around 1.6%, it has a strong history of increasing payouts over time.
In times of trade uncertainty, the key is to focus on businesses with stable cash flow, strong customer demand, and limited reliance on global markets. While certain industries may struggle with tariff-related disruptions, companies with a strong domestic focus offer a safer path forward. For Canadian investors, sticking with companies like Rogers, Hydro One, and Loblaw could be a smart way to navigate rising tariff risks while maintaining portfolio stability.
