Investors just starting out and looking to invest some hard-earned money in the stock market have a daunting task. On one hand, missing out on the returns equities have provided in recent years is scary. On the other hand, there’s reason to believe stocks are overvalued and we could see some serious downside on the horizon.
For those who simply don’t know where to start, here are two of the best TSX stocks out there!
Fortis
A company I think every investor should own as a core position is Fortis (TSX: FTS)(NYSE: FTS). This company has everything a long-term investor wants: growth, yield, and safety.
I think Fortis’s growth profile is actually undervalued right now. This is understandable, since the company’s growth is capped by regulatory forces. That said, Fortis has shown acumen in growing via acquisitions in the past. The company has balance sheet room to do so in the future. Indeed, this is a stock that is well positioned for slow and steady long-term growth. The “slow-and-steady” piece is what I think deserves more value.
Additionally, the company’s dividend is one of the best on the TSX historically from a growth standpoint. Indeed, Fortis’s track record of dividend increases puts this stock in an elite group of Dividend Aristocrats. The company has raised its dividend each and every year for nearly five decades. Thinking that this would somehow abate seems ludicrous.
Being a regulated utility, Fortis has some of the safest cash flows out there. This is not a company one needs to worry about. This is a sleep-well-at-night stock, providing consistent and reliable growth and dividend income.
Royal Bank
Formerly the largest company in Canada by market capitalization, Royal Bank (TSX: RY)(NYSE: RY) is a great long-term holding for any investor. This is one of the safest banks, and companies, for that matter, on the TSX right now. Royal Bank’s lower-than-average yield is a signal of the quality of this global banking player.
Indeed, I think this is a stock investors need to have a long-term investing time horizon with. Banks like RY don’t do well in times of economic crisis, as we’ve seen during the recent pandemic. Additionally, this is not a stock that will outperform speculative assets in a bubble-like environment. However, this is a bank that has been through every terrible economic crisis Canada has faced and come out the other side thriving.
I think if one is bullish on the strength of the long-term Canadian and global economy, Royal Bank is a great place to start. This is a historical compounder of capital with a track record that speaks for itself.
