Strengthen Your Core Portfolio With These 5 TSX-Listed Companies

Stocks with solid earnings and consistent dividend profiles such as Canadian National Railway (TSX:CNR)(NYSE:CNI) should be core additions to your investment portfolio.

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When starting out investing, a lot of people spend too much time chasing the latest fads and the hottest stocks. Much of the time, this leads to people putting all their money into high flyers, which frequently don’t pay dividends, as their valuations skyrocket. Currently, the marijuana stocks, certain tech stocks, and cryptocurrency stocks fit this mould. The problem is that frequently beginning investors get crushed when the market momentum turns, turning them off investing for good.

The thing is that there isn’t a massive trick to investing. The key is to look for companies that make money, pay growing dividends, and have a long-term track record of success. The following five companies should make a decent core portfolio for anyone starting out on their investment journey.

Canadian National Railway (TSX:CNR)(NYSE:CNI)

This company has a long history of dividend payments and growth. Rails are pretty hard to build, so competition is pretty slight, securing its business for the foreseeable future. In the most recent quarter, CNR increased its revenues by 9% and its earnings by 13%. It has a small dividend of 1.5%, but it has increased it for years. The most recent 10% raise only occurred in January.


With the amount of time people spend staring at their phones, you have to believe that a wireless carrier like BCE is making some serious cash. In Q1 2018, BCE reported a 9.8% increase in free cash flow, which should support its over 5% dividend. And that dividend is still growing, hiking it by 5.1% in February of this year.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS)

This international bank has expanded throughout Canada and Latin America, making it one of the most international banks in Canada. It’s an amazing sight to walk down a street in Mexico and see its branches all over. BNS has benefited from its strategy, increasing net income by 6% in Q2 2018. It pays a healthy dividend of over 4% — a dividend that it has raised frequently, including a recent hike of 7.89% in February of this year.

Enbridge (TSX:ENB)(NYSE:ENB)

Enbridge is the gift that keeps on giving, with decades of dividend raises under its belt. The company seeks to continue this trend well into the future, with a dividend raise of at least 10% planned for the next several years. Even after the stellar run the stock has had over the past couple of months, it is still yielding 5.5%. This pipeline company is bound to keep pumping those dividends into your portfolio for years to come.


Although this company might not be the household name the other three are, it still provides excellent results and a good history of growing dividends. The company currently yields only around 1.5%, but it is committed to continuing to grow that dividend, having already increased it 103% since 2013. Open Text has committed to paying out 20% of its operating cash flow as dividends, and that operating cash flow grew almost 50% over the past year, so the dividends should keep on coming.

Build that core

The main mistake people make is that they aren’t investing but merely following the crowd. This is more akin to gambling. Good companies should be the core of your portfolio — ones that make money and are trading at decent valuations. These companies aren’t hard to find, but they can sometimes be lost in the headlines of the latest trend. Don’t get sucked into speculating. Become an investor and start strengthening your portfolio’s core with these five stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kris Knutson owns shares of BANK OF NOVA SCOTIA, BCE INC., Canadian National Railway, Enbridge, and ENBRIDGE INC. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway and Open Text, Canadian National Railway, Enbridge, and Open Text are recommendations of Stock Advisor Canada.

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