The 1 TSX Stock Built for Trade-Headline Chaos

Trade headlines have felt like a pinball machine lately. Tariff threats pop up, markets flinch, then lawmakers scramble to tweak the rules, and the cycle starts again. In early February, the U.S. House votes kept legal and legislative challenges to U.S. tariffs on Canada in play, which tells you policy risk is not settled. Canada also pushed a tentative trade reset with China, and Europe weighed suspending a large retaliatory package against the U.S., so the ground keeps shifting under global supply chains. With all that, how should Canadians invest?

RY

Royal Bank of Canada (TSX:RY) looks built for this noise as it earns money in more than one weather system. It runs personal and commercial banking in Canada, it owns a large wealth business, it has a major capital markets arm, and it operates City National in the U.S. When trade headlines shake sentiment, lending demand can cool, but trading and underwriting can heat up. That balance can keep results steadier than investors expect.

Over the last year, the bank’s biggest business headlines have been the kind long-term investors like: strong results and a bigger dividend. In fiscal 2025, it reported net income of $20.4 billion, up 25% year over year, with diluted earnings per share (EPS) of $14.07 and adjusted diluted EPS of $14.43. It also raised the quarterly common share dividend to $1.64, which matters when headline chaos makes people crave dependable cash flow.

What’s more, in December 2025, OSFI kept the Domestic Stability Buffer at 3.5% for the big banks and said the group sat well above minimum capital requirements. That won’t make any bank invincible, but it does suggest Canada’s system carries a cushion if trade friction spills into slower growth, tighter credit, or higher defaults.

Earnings support

Zooming into the most recent earnings detail, RBC’s fourth quarter showed why diversification matters. It delivered record quarterly results, with diluted EPS of $3.76 and adjusted diluted EPS of $3.85. Strength showed up across businesses, including wealth management and capital markets, which often stay active when volatility rises, and clients rebalance portfolios.

Credit quality is still the swing factor for 2026. In the last fiscal 2025 quarter, RBC beat profit expectations partly because provisions for credit losses came in at $881 million versus estimates around $1.07 billion, though provisions can move fast if the economy weakens. Trade shocks can squeeze exporters, raise input costs, and spook hiring plans. If unemployment rises, provisions usually follow, and that can cap near-term upside for bank stocks.

The near-term catalyst is simple. It reports first-quarter 2026 results on Feb. 26, 2026, and investors will listen for changes in provisions, margins, and any client pullback tied to tariff uncertainty.

Bottom line

The valuation helps the “built for chaos” case, as investors are not paying a wild premium for stability. Recent market data shows it trailing at 16.5 times earnings, and a dividend yield of around 2.8%. In fact, this is what that dividend alone could bring in with $7,000.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTRY$231.2530$6.56$196.80Quarterly$6,937.50

It could be a buy if you want a core Canadian holding that can earn through volatility and pay you to wait. It could be a pass if you want a quick win, because big banks move like cruise ships, not speedboats. The risk is a sharper slowdown that pushes provisions higher and cools lending. The upside is that market churn can keep fees and trading activity humming, and this bank tends to show up when that happens.

The post The 1 TSX Stock Built for Trade-Headline Chaos appeared first on The Motley Fool Canada.

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More reading

• 3 Top-Tier Canadian Stocks That Just Bumped Up Dividends (Again!)
• The Canadian Companies Thriving Despite (or Because of) Trade Tensions
• The Bank of Canada Just Spoke: Here’s What I’d Buy in a TFSA Now
• 5 Canadian Stocks to Watch as January Sets the Tone for 2026
• 5 Stocks to Hold for the Next Decade

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.