Bracing for Higher Rates: Top 5 Companies to Safeguard Your Portfolio

The Bank of Canada (BoC) moved to raise the benchmark rate by 25 basis points to 5% on July 12. That is the highest rate the country has seen in more than 20 years. Today, I want to target five companies that are perfect for protecting your portfolio in this bad climate. Let’s jump in.

This leading grocery retailer is more reliable this decade

Loblaw Companies (TSX:L) is a food and pharmacy company based in Brampton. It is Canada’s largest grocery retailer. Shares of this Canadian stock were up 2.4% month over month through mid-afternoon trading on July 18. The stock is down 1.3% year to date in 2023.

This company released its first quarter (Q1) earnings of fiscal 2023 on May 3. It provided revenue growth of 6% to $12.9 billion. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 7.8% to $1.44 billion. Loblaw finally has a strong price-to-earnings (P/E) ratio of 20. In addition, it offers a quarterly dividend of $0.446 per share. That represents a modest 1.5% yield.

Here’s a top defensive stock to hold as rates continue to rise

Alimentation Couche-Tard (TSX:ATD) is a Laval-based company that operates and licenses convenience stores in North America, Europe, and Asia. Its shares are up 12% year to date. In fiscal 2023, the company posted adjusted net earnings per share (EPS) of $3.12 – up 20% from $2.60 last year. This defensive stock currently has a favorable P/E ratio of 16.

Why this trusted Canadian stalwart belongs in your portfolio

Canadian National Railway (TSX:CNR) is another Canadian staple worth holding for the long term in the face of turmoil. This Montreal-based company is involved in rail and related transportation businesses. Its shares fell 1.9% last month. The stock is down 5.8% year to date in 2023.

In Q1 of fiscal 2023, CNR delivered revenue growth of 16% to $4.31 billion. Meanwhile, operating income increased 35% year over year to $1.66 billion. Adjusted diluted EPS jumped 38% to $1.82. CNR shares have a favorable P/E ratio of 19. It offers a quarterly distribution of $0.79, representing a 2% yield.

An energy stock I would keep to protect your portfolio today

Enbridge (TSX:ENB) is an energy infrastructure giant that needs no introduction. Its shares were down 2.9% month over month in mid-afternoon trading on July 18. This top dividend stock is down 9.7% in the year-to-date period. The company has achieved more than a quarter century of dividend growth. Enbridge is trading in favorable territory compared to its industry peers. It offers a quarterly dividend of $0.887 per share, representing a monster 7.3% yield.

Another defensive stock to hold today

Waste Connections (TSX:WCN) is the fifth and final defensive stock I’m looking to get in the face of higher interest rates. This Toronto-based company provides non-hazardous waste collection, relocation, disposal, and resource recovery services in Canada and the United States. Its shares are up 2.1% year to date in 2023.

This defensive stock is also trading in solid territory at the time of writing. Waste Connections offers a quarterly dividend of $0.255 per share. That represents a modest 0.7% yield.