Canadian investors should invest in stocks with growing dividends and a history of outperforming the S&P/TSX Composite Index. The best stocks to purchase are those which you can buy and forget without needing to manage the assets in your portfolio actively.
If you buy these stocks in a Tax-Free Savings Account (TFSA), the Canada Revenue Agency will not tax your earnings even after you withdraw the funds.
Boralex Inc (TSX: BLX) would be a great long-term stock to buy and hold to supplement your Canada Pension Plan during retirement.
Boralex is an international renewable energy utility company involved in wind, hydroelectric, thermal, and solar fuel technology. Because the company focuses on building long-term contracts, this dividend-paying stock should provide Canadian investors with a less volatile source of investment income.
A stock with a long history of beating the index
By focusing on stocks with long histories of outperforming the index, you can be sure to maximize the probability of achieving maximum stock market portfolio returns in the next 20 years.
Looking for proven long-term performance is better than placing bets and guessing which stocks may bounce back over the next year. Maximizing returns also involves minimizing risk, and the time you spend managing your portfolio.
In the past 25 years, Boralex has experienced a 565.5% increase in price. Over the same period, the S&P/TSX Composite Index level percent change is only 259.9%.
While index returns are still impressive, Canadian investors planning for retirement should look for the alpha-level gains in individual stocks to complement ETFs, bonds, and Guaranteed Investment Certificates (GICs) asset holdings.
The last five years tell a similar story for Boralex stock. The S&P/TSX Composite Index price level percent change is only 17.72%, while the price on shares of Boralex has increased 116.6%. Stocks that consistently outperform the index over the long-term are safer stocks to buy than new outperformers.
Buy dividend stocks with solid price performance
Canadian investors should also look for growing dividends when picking individual stocks to buy. For example, Boralex has increased its dividend payments to shareholders by 26.92% over the past five years.
Meanwhile, the dividend yield has decreased, but only because its lucky shareholders also earned substantial capital gains during the same period.
BLX Dividend data by YCharts
Aspiring Canadian retirees should find stocks with growing dividends and falling yields to maximize stock market returns. The key to making money on the stock market is identifying stocks which have historically provided above market average returns to shareholders over at least 10 years. There’s no point in buying dividend stocks that won’t protect your initial investment.
TFSA investors get the best tax breaks
Canadians get some of the best tax breaks with TFSAs. Not only can you grow your wealth without worrying about giving a percentage to the Canada Revenue Agency, but when you use your savings to supplement your Canada Pension Plan, the CRA still can’t touch the money.
Most Canadians keep their TFSA savings in cash versus stocks. Stocks sometimes appear too risky for the average middle-class saver. I’m here to tell you that there isn’t much risk in self-investing. You simply need to do a little bit of research and take a long-term mindset to your investments.
