Trump tariffs have the whole world talking. All major and emerging economies are facing the impact as the U.S. President sets reciprocal tariffs and looks to bring back manufacturing to the United States. The stocks directly impacted are too risky to invest in because it is difficult to say who will be the winners and losers. If the tariffs bring a structural change in the supply chain, the effect could be lasting.
Two Canadian stocks to invest in amidst Trump tariff uncertainty
At a time when it is becoming more and more difficult to trade with the United States, companies that rely on domestic sales present an attractive investment opportunity. Investing in them early while they are still cheap could preserve your money and help you make the most of market volatility.
Topicus.com
Topicus.com (TSXV:TOI), a pan-European software company, is a spin-off subsidiary of Canada’s Constellation Software. Like its parent, Topicus.com acquires vertical-specific software companies dealing in mission-critical applications. Topicus.com is not directly impacted by tariffs, as most of its revenue comes from Europe.
And because the software is mission-critical, a reduction in business spending could slow new software contracts. Thankfully, Topicus.com’s revenue growth is driven by the acquisition of new companies. A weak stock market and economic uncertainty have created opportunities to make acquisitions at attractive prices.
A higher number of acquisitions of companies with stable cash flows could boost cash flows in the next two years. Moreover, the company uses its cash flows from previous acquisitions to fund new acquisitions, which means securing finance is not an issue.
Topicus.com stock moved in the opposite direction from the market, surging 13.6% year to date while the TSX Composite Index fell 4.7%. This itself shows that Topicus.com could preserve your investments in a tariff-led market downturn.
Telus stock
Telus Corporation (TSX:T) earns all its revenue from Canada. Its strength is its fibre network deployed in the vast lands of Canada and the subscription revenue it brings. The company has reduced its capital spending on infrastructure, which means any dependency on component imports has been reduced.
Telus stock has been falling because of the regulatory change that allowed smaller players to access Telus and BCE’s fibre infrastructure for a fee.
Tariffs make other stocks risky, which could push investors to a dividend-paying stock not directly impacted by tariffs. Any indirect impact Telus feels due to a reduction in consumer and business spending is already priced into the stock, which has fallen 15% between March 10 and April 8.
While the telco has a significant debt, its strong cash flow helps it pay interest and increase dividends. Its 81% dividend payout ratio hints that the company has the flexibility to grow dividends. Telus’s focus on reducing debt and interest rate cuts in response to tariffs could introduce a debt restructuring opportunity.
The company’s long-term growth from the 5G revolution remains intact. The 5G infrastructure could bring artificial intelligence (AI) to the edge. AI at the edge (robots, drones, security cameras, and more) could open more possibilities for digital solutions, cybersecurity, and the cloud. How this growth will shape up is a discussion for another day. But you can see Telus’s revenue growing even after five years, and that is converting into dividend growth.
Investing in this stock at the dip can help you lock in a high dividend yield of 8%, as well as 7–8% in dividend growth in the future.
How to invest in these stocks and protect your portfolio from Trump tariffs
You could consider investing $1,000 in each of the two stocks and holding them for at least five years. Further consider accumulating the two stocks throughout 2025 market dips in your Tax-Free Savings Account (TFSA) as they can generate higher returns. A TFSA can make your investment income tax-free.
In a world where the end consumer bears the cost of tariffs, a tax-free investment income could be a welcome breather.
