Move over, millennials, a new generation of investors is hitting the TSX. Believe it or not, the first wave of Generation Z, also known as zoomers, are already at the age of stock investing.
While there’s never a wrong time to start planning for retirement, getting in early certainly makes a lot of sense. That’s why we’ll be taking a look today at two of the best stocks to buy young and start saving.
Steady wealth creation vs. high capital gains
There are two main ways to pad out a registered retirement savings plan (RRSP) with blue-chip stocks: Capital appreciation and passive income.
While some investors prefer one type over the other, however, there is definitely something to be said for adding a bit of both to an RRSP. That’s why with a stock such as consultant WSP Global (TSX:WSP), a lower yielding dividend ticks a box but isn’t the main focal point.
Instead, investors should be looking at cashing in those shares once they have appreciated sufficiently. With its huge spread of business consulting areas and admirable geographical diversification, WSP Global is a low-risk play that grants investors access to a rewarding suite of industry types. Its 1.7% does add some regular income, too, and in time that will mount up.
That’s one of the biggest benefits of having broad financial horizons: Investors stacking shares early on will have a decent runway over which to steadily accumulate wealth.
However, long-term stock portfolio builders may decide that the side income is more of a draw than the company stake itself, in which case a different field of assets may be more appealing, such as real estate investment trusts (REIT).
A rich-yielding REIT with risk-spreading properties is American Hotel Income Properties REIT (TSX:HOT.UN). With its 12.57% yield, AHIP is a popular choice for the type of stockholder who likes to be richly rewarded for their loyalty and patience. The main draw here, apart from the exceptionally beefy yield, is the defensive nature of hotel real estate investing.
For zoomers entering the REIT market with the purpose of retirement planning, AHIP provides access to branded, high-end hotels with global names such as Marriott, Hilton, and IHG.
There’s also another tier of access, which includes railway staff contracts with the Wyndham Hotel Group. This latter revenue stream provides real estate investors with a low-exposure route to rail industry stability.
AHIP and WSP both offer new investors some diversification in a long-range portfolio, with the latter stock giving new investors indirect access to a slew of industrial areas, including construction, infrastructure, real estate, transportation, and energy, including the high growth of renewables.
The bottom line
Buying stakes in sturdily diversified money machines such as AHIP and WSP could help young investors building first-time stock portfolios create wealth over the long term with relatively low risk attached.
Both stocks are different enough to hold in the same portfolio, while adding money magnets such as the Big Five and stolid Canadian utilities can help strengthen a basket of blue-chip investments.
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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.