For many investors, this market may seem a bit toppy. Valuations have surged, and most stock market indices are near all-time highs. Indeed, for Canadian investors looking at the TSX, this is also the case, with many names having run up into the second half of the year.
Nobody truly knows what the second half of the year will bring. But for those looking to hold top-notch blue-chip Canadian stocks with the potential to weather what could be a more volatile year or two ahead, there are some fantastic options to choose from.
Here are three of my top stock ideas for those concerned about value and growth over the medium-term.
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Royal Bank of Canada
In the world of blue-chip Canadian stocks, no stock is more blue than Royal Bank of Canada (TSX: RY). The nation’s largest stock by market capitalization, Royal Bank has continued to perform well in the face of some significant headwinds of late.
Financial stocks have continued to perform well of late, as the market appears to want to digest an improving trade environment and lower interest rates. Royal Bank has continued to benefit from a steepening yield curve domestically and abroad, and this environment is broadly expected to continue over time.
Unless the Canadian economy implodes, RBC will continue to be among the most defensive stocks Canada has to offer. With a dividend yield of 3.4% and a price-earnings ratio around 12 times, there’s a lot to like about how this stock is valued relative to the other options investors have available to them right now.
Manulife Financial
Sticking within the financial sector for now, Manulife Financial (TSX: MFC) is another top name I continue to pound the table on. For those who have invested in this company in past years (when I was banging the table more vigorously), the returns shown below highlight the value of being patient with such a name.
The company’s portfolio of long-duration assets did get hit hard during the central bank hiking cycle we saw take place around the world in years past. However, with interest rates on the decline, many of the same catalysts driving Royal Bank stock higher are taking Manulife on a nice ride as well.
For those looking to invest in an RRSP, holding a stock that’s a steady long-term gainer is what most personal finance experts will suggest. Manulife fits this bill, given its 4% dividend yield and price-earnings multiple of 16 times.
Alimentation Couche-Tard
Last, but certainly not least on this list of defensive Canadian stocks to buy, we have Alimentation Couche-Tard (TSX: ATD).
What I like most about Couche-Tard in this environment (particularly for those who are antsy about the current macro bacdrop) is the company’s underlying business model. Operating a vast network of thousands of gas stations and convenience stores across North America, Europe, and other global markets, Couche-Tard has grown into one of Canada’s quietest centibillion-dollar companies.
Until folks stop commuting into work or picking up their daily fix at their local gas station, this is a stock I think should have consistent upside over time. While this stock is down on a year-to-date basis, bucking the trend of the other stocks on this list, it’s one I think has the most upside relative to its peer group right now.
With a current valuation of 19 times earnings and a 1.2% dividend yield, this is a growth stock I’m expecting to continue on its long-term growth trajectory over time.
