3 Low-Volatility Stocks for Smoother Sailing

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Written by Rajiv Nanjapla at The Motley Fool Canada

After rising 7.2% last month, the S&P/TSX Composite Index has kept its upward momentum, growing over 1% on December 1. The expectation that the central banks will not further hike interest rates amid signs of inflation cooling down has increased investors’ confidence, driving the equity markets.

However, a few OPEC (Organization of the Petroleum Exporting Countries) members recently announced that they would cut oil production individually from 2024, which could lower overall oil production by 2.2 million barrels per day. A decline in oil production could drive oil prices higher. Besides, the concerns over political instability in the Middle East could create volatility in the equity markets. So, if you also expect the markets to turn volatile, here are three low-volatility stocks you can buy to strengthen your portfolio.


Fortis (TSX:FTS) operates a low-risk utility business serving 3.4 million customers across North America. With 99% of regulated assets, the company’s financials are largely immune to market volatility. It has outperformed the broader equity markets over the last 20 years, with an annualized return of 10.5%. Meanwhile, the company has also rewarded its shareholders by raising its dividend uninterruptedly for the previous 50 years, with its forward yield currently at 4.30%.

Further, Fortis plans to invest around $25 billion from 2024 to 2028, growing its rate base at an annualized rate of 6.3%. Besides, the company continues to innovate to keep operating costs lower. The company also strengthened its financial position by selling its Aitken Creek Natural Gas Storage Facility in British Columbia for $400 million. So, given its risk-free underlying business, healthy growth prospects, and solid financial position, I believe Fortis would be an ideal buy for conservative investors.

Waste Connections

Another TSX stock that risk-averse investors should consider is Waste Connections (TSX:WCN), a solid waste management company. It operates in secondary and exclusive markets, thus facing less competition. Besides, the company is expanding its footprint across North America through strategic acquisitions. Despite its aggressive acquisition strategy, the company has maintained a healthy operating margin, which is encouraging. Amid its solid financials, the waste collector has delivered impressive returns for the last 10 years at a CAGR (compound annual growth rate) of 14.9%.

Although the company’s forward yield is a low 0.83%, investors can benefit from its consistent dividend hikes. Since 2010, WCN has raised its dividends at an annualized rate of 15%. Meanwhile, the company expects to generate around $150 million of annualized revenue in 2024 from its acquisitions completed year to date. Meanwhile, the growth could rise further amid continued acquisitions and improvement in commodity-related activities.


Dollarama (TSX:DOL), a discount retailer, would be an excellent low-volatility stock to have in your portfolio. Supported by its broad range of product offerings at attractive prices, the company has grown its financials at a healthier rate. Since 2011, its revenue and net earnings have increased at an annualized rate of 11% and 16.9%, respectively. Amid these solid financials, the company has returned over 600% in the last 10 years at an annualized rate of 21.6%.

Meanwhile, the discount retailer is focusing on strengthening its direct sourcing capabilities to eliminate intermediatory expenses, thus offering its products at attractive prices. Besides, the company expects to add 475 stores over the next eight years to increase its store count to 2,000 by 2031. Its subsidiary, Dollarcity, also hopes to add 390 stores over the next six years. Given their solid underlying businesses and healthy growth prospects, I believe Dollarama would strengthen your portfolio.

The post 3 Low-Volatility Stocks for Smoother Sailing appeared first on The Motley Fool Canada.

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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.


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