2020 is fast approaching, and what could be a better time to put your portfolio on autopilot with stress-free buy-and-hold stocks?
The holiday season should be a time to relax and enjoy the company of family and friends. Yet for too many people, buying stocks can become a major source of worry over the holidays — especially if you’re trying to time the market, every little swing can seem like it’s forcing you to make a life-or-death decision.
Unless, that is, you curb your ambition and stick with passive investments.
By investing passively in income-producing stocks and ETFs, you eliminate the need to fret over market swings.
If you’ve resolved to take some stress out of your life in 2020, the following are two passive investments to consider buying for the year ahead.
Fortis
Fortis (TSX: FTS)(NYSE: FTS) is one of Canada’s largest utility companies.
With assets in Canada, the U.S., and the Caribbean, it’s a major player in the utilities space.
Currently, Fortis has 3.3 million customers and $53 billion in total assets. The company is looking to expand this reach through a $18.3 billion capital-expenditure program that it will roll out over the course of five years.
Fortis’s capital-expenditure program will see old infrastructure upgraded and new infrastructure added to expand the company’s service area. The expenditures aim to increase rate base (i.e., the value of property on which the company may earn a return).
Over the years, Fortis has been one of Canada’s most dependable dividend stocks. It has raised its dividend every single year for 46 years, including down years during recessions. Speaking of recessions, Fortis managed to grow its earnings in 2008 and 2009 — the years of the late 2000s global recession. It’s a testimony to the company’s stability and its status as one of Canada’s true “set-it-and-forget-it” stocks.
iShares S&P/TSX 60 Index Fund
iShares S&P/TSX 60 Index Fund (TSX: XIU) is a diversified Canadian ETF made up of the market cap-weighted components of the TSX 60 index.
The TSX 60 is a sub-set of the S&P/TSX Composite Index made up of the 60-largest TSX stocks.
Because of the TSX’s heavy weighting in large caps, XIU’s returns are generally going to be very similar to the TSX.
However, over the years, XIU has performed slightly better than the TSX, and the TSX Composite fund, XIC. A possible explanation for this is the fact that the TSX 60 excludes many small-cap energy stocks that cratered after the 2014 oil price collapse.
If you really want to buy and hold without ever having to worry, ETFs like XIU are the absolute best picks you can make.
Offering built-in diversification, they eliminate the need to painstakingly build a diversified portfolio of your own. With low MERs, they eliminate the steep costs of actively managed funds.
Finally, in Canada, index ETFs can come with surprisingly high dividend yields. XIU yields about 2.8% at current prices, which is more income than you’ll get on an S&P 500 index fund at the moment.
