After a very difficult ending to 2018. I don’t blame investors if they are daunted by prospects of 2019.
But let’s take a collective breath and remember that in down markets, there is a lot of money to be made if we remain focused on the long term and are level-headed.
Here are three important points to keep in mind as you navigate 2019, because despite it being a daunting process, we can move closer and closer to financial success.
Anchor your portfolio
A portfolio needs to be anchored.
It needs to have stocks in it that have stood the test of time and that have amassed good track records of stability, growth, and shareholder value creation — stocks such as TransCanada (TSX:TRP)(NYSE:TRP), a company that has been developing and maintaining energy infrastructure for more than 65 years while handsomely rewarding shareholders.
TransCanada has provided shareholders with an 8.37% compound annual growth rate since 2000, while delivering yearly dividend increases, while delivering stability and peace of mind to shareholders, as 95% of TransCanada’s EBITDA is from regulated or long-term contracted assets.
It has above-average, visible growth and an infrastructure presence that should ensure strong growth well into the future.
Invest in the oil and gas opportunity
Oil prices have been volatile, the oil and gas industry has been a train wreck in Canada, and stock prices are more than reflecting this. If we keep our eyes on the long term, though, we can see that the opportunity here is huge.
The oil and gas industry is not going anywhere, at least in the short to medium term, and certain companies are still generating big cash flows, yet the stocks are depressed.
I view Freehold Royalties (TSX:FRU) as a low-risk way to play the space due to its highly diversified list of quality assets and its royalty model.
Trading at $8.61 at the time of writing, it has been hit hard in the last year, down almost 40%.
Freehold stock currently has a dividend yield of 7.32%, which is safe and well covered.
While all the companies I have discussed in this article are top dividend stocks, I would like to throw in Royal Bank of Canada (TSX:RY)(NYSE:RY), with its more than 4% dividend yield and its strong track record of dividend growth and stability.
The bank is having a very strong start to the year and had a strong 2018, with a 3% dividend increase to $3.92 per share and a share buyback of nine million shares, which is testament to this strength.
Royal Bank’s 10-year stock performance is 186%. This does not include dividends, which have grown at a compound annual growth rate of almost 7% in the last 10 years.
When you buy heavily cyclical stocks at low prices… and then hold the shares until the cycle reaches its peak… you can make a very healthy profit.
Every investor knows that. But many struggle to identify the best opportunities.
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Fool contributor Karen Thomas owns shares of TRANSCANADA CORP. Freehold Royalties is a recommendation of Dividend Investor Canada.