Since July 1980, the S&P 500, the U.S. stock market index based on the market capitalizations of 500 of the most valuable companies with common stock listed on the NYSE or NASDAQ, has produced an annualized return of 8.4%. An investment of $1,000 that tracked the index would have returned more than 20 times its value up until today.
Young investors who are taking their first steps into the stock market should be diversifying their portfolios. Let’s take a look at some of the best options the S&P/TSX has to offer right now.
Canadian Imperial Bank of Commerce
Canadian bank stocks are a favoured addition to portfolios due to world-class stability and a long history of dividend increases. The share price of Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has grown 20% over a 10-year period. The bank recently boosted its dividend to $1.27 per share with a dividend yield of 4.69%. It posted positive second-quarter earnings with profits up 3.3% year over year.
CIBC is an expensive but worthy addition to any new portfolio; it has a great long-term outlook and a high dividend.
Kinaxis Inc.
Kinaxis Inc. (TSX:KXS) is a Canadian-based company that delivers cloud services and helps manufacturers and brands owners to drive supply-chain management, sales, and operations planning, and other functions. Kinaxis is expected to deliver second-quarter results on August 8. In its first-quarter report, the company posted profit of $22.2 million — up 17% from Q1 2016.
Kinaxis has seen an increase of 514% since its IPO on June 10, 2014. The company offers an impressive, innovative service that will see its demand increase as businesses look to improve and modernize processes. Kinaxis is a promising growth stock and a recommended addition to a new portfolio.
Inter Pipeline Ltd.
Dividends are a sign of investment strength. Dividends also provide another way for investors to win with their investments: through capital gains and through a dividend payout. For young investors who may not be used to the ups and downs of the market, the promise of a dividend can give the extra security that will help investors be patient, which is key to sticking to an investment strategy. And, in a period of positive growth, you can pocket the gains and the dividend!
Inter Pipeline Ltd. (TSX:IPL) boasts an impressive 6.51% yield and a dividend of $0.14 per share. It provides a nice quarterly payout ratio of 61%. The company is a multinational petroleum transportation and infrastructure limited partnership that is a leader in North America in natural gas and natural gas liquids extractions businesses.
New investors should be looking for ways to maximize long-term growth prospects for portfolio. Mitigating risk and providing income is important as well, but more than anything, those starting off should be aware of the tremendous benefits offered by linking one’s fortunes with the best companies the country has to offer.
