These are uncertain times as abrupt tariff changes are building anxiety among investors. Countries are diversifying their exports and imports to reduce concentration risk. At times like these, Canada’s export of 99% of its oil and natural gas has made investors worried about their investments in North American energy stocks. West Texas Intermediate crude price has declined to US$62.6/barrel, ending the two-year cyclical rally that pushed the oil price above US$75/barrel. Many investors who cashed out on cyclical stocks can consider investing the money in all-weather stocks.
Something about all-weather stocks
You can categorize stocks on various grounds, such as market cap, risk, returns (growth and dividend), and nature of the business (cyclical, seasonal, and resilient). All-weather stocks are businesses that have matured or have a robust balance sheet and a low-risk business model. The business is resilient to macroeconomic events and can sustain a crisis.
You can shortlist such all-weather stocks based on the product or service offerings. Grocery, utility, and communications are services you will use irrespective of the economy’s condition, making them an all-weather business.
Loblaw stock
The discount food and pharmacy retailer Loblaw (TSX:L) had a tailwind in three of the last four years. Its stock rallied 92% during the pandemic years of 2021 and 2022 because of its pharmacy business. Then, it rallied significantly in 2024 as inflation eased and groceries became affordable. However, the revenue and earnings per share growth rate continued to slow, inflating its valuation. The stock is trading at a forward price-to-earnings ratio of 22.2, the highest since December 2023.
Behind the high valuation is the defensive stock’s 238% rally in the last four years. The last time the retailer’s stock price rallied to such an extent was between August 1996 and 1999, when it surged 210%. We all know what happened in 2000. The market crashed because of the dot.com bubble, but Loblaw’s stock rallied more than 110% between 2000 and 2004, even after the previous 210% rally.
Even though Loblaw has a high valuation, the upcoming tariff war will be tough for consumers because of rising inflation. At such times, a discount retailer like Loblaw can help them save on expenses. Moreover, it will also provide investors with space to protect their investments from falling. It is one all-weather stock you can buy in the dip and at its peak.
CT REIT
CT REIT (TSX:CRT.UN) is another all-weather stock you could consider investing in for its 6.39% dividend yield. The real estate investment trust (REIT) enjoys a priority status from its parent Canadian Tire, which sells petroleum, sports, houseware, leisure, and automotive-related products. You may say this is not a grocer, but the retailer provides some essential house and car-related products that do well in a weak economy.
CT REIT is the landlord for most Canadian Tire stores. Hence, CT REIT enjoys more than 90% occupancy even in a weak economy. It has a dividend payout ratio of 75% at a time when other retail REITs had a payout ratio above 90% because of the high interest rate in 2023.
It is one of the few REITs that have consistently increased dividends by 3% annually in the last 11 years. This shows CT REIT’s resilience to economic activities. An economic slowdown in the short term is unlikely to affect the REIT’s monthly dividend payouts, making it an all-weather stock where you can park your money in times of uncertainty.
