3 Low-Risk Canadian Stocks with Big Dividends

Should You Buy Canadian Stocks?

Canadian Stocks Have Less Political Baggage than U.S. or Chinese Stocks Right Now. And These 3 Dividend Payers Look Especially Low Risk.

The hottest stocks in Canada in recent years have been cannabis stocks, but they’ve also been extremely volatile—in both directions. Moves of 10% and even 20% are not uncommon. For a lot of investors, that’s just too much risk. So today I’m looking at a safer group of Canadian stocks—specifically, low-risk Canadian stocks with big dividends.

These low-risk Canadian stocks won’t make you rich overnight, but they will let you sleep well, as they all have low volatility and high dependability. Plus, each one has a positive long-term chart, so you can invest in any one of them and expect to come out ahead in the long run.

3 Low-Risk Canadian Stocks

Low-Risk Canadian Stock #1: Pembina Pipeline (PBA)

Pembina pays a strong dividend, at 5.0%. But you’ve got to sit through some bumps if you hold this stock, given the ups and downs of oil prices.

The company operates over 10,000 kilometers of pipeline across Alberta and British Columbia, moving both natural gas and other petroleum products across the country and into the U.S.

After a big 2018, Pembina’s sales and earnings are expected to slow in 2019, to 2% and 12%, respectively. But with a P/E of 20, the valuation is at least reasonable.

As to the chart, it looks great, but bumpy. It got off to a huge start this year, jumping from 28 to 35 in January and February. Since then, it’s mostly chopped around in a tight range between 34 and 37, and currently trades at 36. Eventually, a breakout will come – hopefully to the upside.

Pembina Pipeline (PBA) is one of three low-risk Canadian stocks with big dividends to buy now.Low-Risk Canadian Stock #2: Restaurant Brands (QSR)

This plain name owns three of consumers’ favorite fast-food brands—Tim Horton’s, Burger King and Popeyes Louisiana Kitchen. All told, its holdings bring in $30 billion in system-wide sales from over 24,000 restaurants in more than 100 countries and U.S. territories.

Burger King is the biggest contributor to the business, accounting for 67% of revenues, but Popeyes, the smallest contributor, is growing the fastest.

The quarterly dividend is 2.6%. Growth is fine – analysts anticipate 5% sales growth and 10% EPS growth this year, though both figures are down from 2018.

As to the stock, it’s trending quite nicely, vaulting from 50 to as high as 78 so far this year. You can buy on pullbacks like the current one (to 74); any push above 78 would be quite bullish.

Low-Risk Canadian Stock #3: Telus Corp (TU)

Telus is one of the major Canadian telecom providers, providing everything from dial-up phone service to internet access to streaming video. (They claim to have the fastest wireless network in Canada.)

Long-term trends are excellent, if slow; the company has grown revenues by single-digit percentages every year of the past decade. The most recent quarter was consistent with that trend, with sales up 4.3%; earnings growth was much better at +32.6%.

The dividend is 4.7%.

As to the stock, it’s up more than 12% so far this year, and has been chopping around between 35 and 37 since March. A push above 38 could signal a big breakout.

The Best Stock of the Three

Any one of these low-risk Canadian stocks with big dividends might be a fine long-term holding, but what if you’re more short-term oriented? What if you want to benefit from an up-cycle and then avoid the down-cycle?

For my money, the best bet today is Restaurant Brands (QSR). It’s just off of new highs and has been trending well all year long. Its rally doesn’t look over yet.

Timothy Lutts

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*Note: This post has been updated from an original version.

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