How diversified is your portfolio? If you’re like most investors, the answer to that seemingly simple question would be a shrug or an awkward if not downright uncomfortable stare.
In truth, a portfolio should be well diversified with a complement of investments taken from a broad section of the market. Those investments can often change, and perception of what is a well-diversified (and “safe”) investment can change quickly in a volatile market.
So what can an investor do? Apart from obsessing over the performance of each individual stock, there are several gems on the market that are not only gleaming with opportunity, but also offer handsome income-earning potential. Here are two such investments that will make excellent long-term additions to any portfolio.
Play the defense
A portfolio with a solid line of defensive investments is going to become more and more prevalent in the months and years ahead. A growing number of market critics continue to see a correction hitting the market over the next year, despite the strong gains and positive news that continue to flood the market.
In order to counter that potential scenario, adding a defensive investment such as Fortis Inc. (TSX: FTS)(NYSE: FTS) makes perfect sense.
There are two key reasons why Fortis is a great investment to consider. First, there’s the stable nature of the utility business. To put it bluntly, for as long as the power keeps flowing, Fortis will receive a steady stream of revenue.
Power agreements sometimes spanning decades set out the price and compensation to be provided, which effectively makes Fortis a passive investor’s dream, leading to my second point.
Fortis offers a handsome quarterly dividend, which, while not the highest yield on the market, does provide a 3.53% yield and a very healthy history of annual upticks that goes back well over four decades.
If that weren’t reason enough to buy Fortis, investors should note that management has committed to continue those annual upticks through the next few years and Fortis is investing into both upgrading its facilities as well as moving towards renewable energy.
Living the wireless dream
When most investors think of BCE (TSX: BCE)(NYSE: BCE), images of the company’s massive media network and traditional wired phone business come to mind.
Today, BCE is a behemoth in the media sector with dozens of TV and radio stations in its portfolio, as well as an interest in professional sports teams. The most impressive asset of BCE that investors should focus on, however, is the company’s booming wireless segment.
You may not realize it, but wireless connections have gone from being an auxiliary communication and status symbol to a necessity of our modern society in under a decade.
During that transition, wireless devices (no longer known only as phones) have taken over the jobs of dozens of other standalone devices that we once had, replaced by data-hungry apps.
That segment continues to see strong subscriber growth with each passing quarter, accounting for a growing chunk of the company’s revenue during earnings season, which is only going to continue growing.
Speaking of growth, BCE offers a mouth-watering 5.26% quarterly dividend that surpasses that of its peers, making it a prime investment option for income-seekers.
Also worth noting is that BCE has been rewarding shareholders with that dividend for well over a century, and has maintained annual or better bumps to that dividend over the years, with the payout more than doubling in the past decade.
Final thoughts
Finding the right mix of investments doesn’t need to be complicated. The two investments outlined here are staples of Canadian business and have provided over a generation of investors with strong income-earning potential across different market cycles.
In short, buy them, hold them and become rich.
