3 Stock Tips to Boost Your Returns in 2021 and Beyond

Not happy with your investment returns this year? Here are three tips to boost your returns for 2021 and beyond!

new year 2021

Image source: Getty Images

Investors have got to tread carefully. It’s an all-time-high market when there are still uncertainties, such as how well global vaccine programs against the pandemic will execute.

There’s a meaningful proportion of the Canadian stock market in the energy and materials sectors. Specifically, energy and materials are about 13% and 15%, respectively, of the TSX index.

Stocks in these sectors can be more unpredictable. Investors need to tread carefully around these sectors (time the buys and sells carefully) or avoid them altogether. Here are three stock tips to help you improve your long-term returns.

Get passive income from stable dividends

One sure way to get consistent returns is to earn passive income from dividends. You can explore safe dividends in traditional businesses such as banks, utilities, and telecoms.

Here are the dividend yields of the Big Six Canadian banks:

  • Royal Bank of Canada: 4.09%
  • Toronto-Dominion Bank: 4.41%
  • Bank of Nova Scotia: 5.27%
  • Bank of Montreal: 4.36%
  • CIBC: 5.24%
  • National Bank of Canada: 3.94%

Here are the dividend yields of some popular utilities:

  • Fortis: 3.81%
  • Emera: 4.70%
  • Brookfield Renewable Power: 3.38%
  • Brookfield Infrastructure: 3.74%
  • Algonquin: 4.03%

And here are the Big Three telecom yields:

  • BCE: 5.72%
  • Rogers Communications: 3.30%
  • TELUS: 4.85%

Invest in growing businesses

Other than banks, utilities, and telecoms, you can also stick with proven sectors like technology. Essentially, you want to invest in businesses that are growing. Banks, utilities, and telecoms tend to grow at a rate that’s faster than inflation in most years.

You can find even greater growth in technology stocks. A prime example is Shopify, which lets merchants sell online on its multi-channel e-commerce platform. In Q3, its revenue was 96% higher year over year!

The growing components of businesses will drive long-term price appreciation in stocks. It could help to boost returns if you buy after stock corrections or consolidations.

Diversify away from Canada

As mentioned earlier, because materials and energy make up a meaningful part of our economy, Canadian portfolio performance may be weighed by those sectors when the economy is in turmoil.

Canadian investors should diversify away from Canada and invest globally. Notably, some of our banks and utilities do have some international operations. But there are even more investment choices as close as our neighbour south of the border.

It can be costly to invest in a number of individual stocks that you’re interested in outside of Canada. Trading fees can add up quickly. If so, you can consider investing in exchange-traded funds (ETFs) in growth areas you’re interested in.

For example, I recently discovered Global X Social Media ETF under the ticker NASDAQ:SOCL, which looks highly promising and could be an incredible buy on corrections.

The ETF provides exposure to global social media companies. You’ll probably recognize its top holdings, including Snap, Facebook, Tencent, Twitter, and Match. These top five holdings make up about 42% of the ETF’s net asset value.

From the market crash bottom earlier this year, SOCL has more than doubled by appreciating 128%. ETFs are a low-risk and low-cost way to invest in a specific area. You’re getting exposure to a basket of companies, which should reduce volatility.

The Foolish takeaway

Try these three tips to improve your returns for the year 2021 and beyond. Specifically, get passive income from safe dividends, invest in growing businesses, and diversify away from Canada.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Kay Ng owns shares of Brookfield Infrastructure Partners, Facebook, Royal Bank of Canada, Tencent Holdings, The Bank of Nova Scotia, and The Toronto-Dominion Bank. David Gardner owns shares of Facebook and Match Group. Tom Gardner owns shares of Facebook, Shopify, and Twitter. The Motley Fool owns shares of and recommends Facebook, Match Group, Shopify, Shopify, Tencent Holdings, and Twitter. The Motley Fool recommends BANK OF NOVA SCOTIA, BROOKFIELD INFRA PARTNERS LP UNITS, Brookfield Infrastructure Partners, FORTIS INC, ROGERS COMMUNICATIONS INC. CL B NV, and TELUS CORPORATION.

More on Stocks for Beginners

Happy shoppers look at a cellphone.
Stocks for Beginners

Why Is Aritzia Stock Up 22% After Earnings?

Aritzia stock (TSX:ATZ) surged in share price after its last earnings, so is it still a good buy? Or should…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

1 TSX Stock That Could Help Set You Up for Life

Early investors in Intact Financial (TSX:IFC) stock could earn a 17% dividend yield in 2024. Here's how IFC stock could…

Read more »

Target. Stand out from the crowd
Stocks for Beginners

5 Stocks You Can Confidently Invest $500 in Right Now

Whether it's stocks making a comeback or proven investments over decades, these five belong in your portfolio.

Read more »

alcohol
Stocks for Beginners

I’d Aim for $1 Million Buying Just These 3 TSX Stocks

These three TSX stocks have a long history of making millionaires, but don't count them out. Long-term investors have more…

Read more »

Dice engraved with the words buy and sell
Stocks for Beginners

TD Bank Stock: Buy, Sell, or Hold?

TD bank (TSX:TD) continues to face issues regarding its anti-money laundering issues, but has made a great start.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Stocks for Beginners

5 Canadian Stocks to Buy and Hold Forever in Your TFSA

Are you looking for some Canadian stocks for a long-term investment? These evergreen stocks can help you generate wealth and…

Read more »

Target. Stand out from the crowd
Stocks for Beginners

2 Stocks Down 15% and 24% to Buy Right Now

Both of these stocks may be down, but do not count them out. Not if you want returns in your…

Read more »

financial freedom sign
Stocks for Beginners

How to Turn Your TFSA Into a Gold Mine Starting With $10,000

Here's how I would invest in a TFSA.

Read more »