Buy This Mini 4-Stock Portfolio for Quality TSX Access

Silvercorp Metals (TSX:SVM)(NYSE:SVM) and three other stocks offer a quick way to build a new TSX portfolio built around quality.

Starter packs are available for just about every type of novice. The PC gamer usually gets a standard build — monitor, tower, keyboard — that can be added to. A home brewer can likewise pick up a still and ingredients to quickly begin their own line of quirky beverages. But investors usually have to choose from ETFs and indexes that are often too broad — or too narrow — for the market. And in today’s high-volatility world, that can be something of an issue.

That’s why picking the best stocks and putting them together in a kit-built portfolio is sometimes the best way to go. The trouble is that some stocks are vastly better than others — even within the same industry. Today, we will explore four stocks that can help to build a new portfolio. Covering stocks from the Big Five banks to mining to energy to supply infrastructure, here’s a simple four-stock play to get investors started on multi-year wealth generation.

Mixing financials and metals stocks

While there is no such thing as a risk-free stock, CIBC nevertheless comes close. Rewards for investors in this blue-chip Canadian bank range from a 5.3% dividend yield (with a reasonable 71% payout ratio) to fair value and a squeaky-clean balance sheet. CIBC’s P/B ratio of 1.3 times book is well in line with the sector average. Another consensus moderate buy, this rich-yielding Big Five play could have 26% upside if economic conditions improve.

Silvercorp is a relatively cheap stock with a healthy balance sheet and a reliable dividend. Throw in its access to silver, and there are a handful of reasons already to get invested. A stock that could sell for $22, this name — at $7.20 a pop — is still currently undervalued. It’s fairly low risk, too, with a three-year beta of just 0.6. And despite all of this, Silvercorp could bag shareholders as much as 800% in total returns by 2026.

Two stocks to lower portfolio risk

CP Rail tends not to get the same kind of coverage as its biggest rival CN Rail. Regardless, CP Rail is a consensus moderate buy at the moment, yielding 0.9% and with around 14% upside potential. But outside of price targets, total returns by mid-decade could throw as much as 180% in shareholders’ laps. Up 30% in 12 months, and about as low-risk as Silvercorp, the steady-rolling CP Rail has resonated with investors during the pandemic.

Fortis is renowned for its track record of dividend payments and has lost just 10% in the last 12 months. Despite being a renowned income stock, Fortis is still good value for money. Selling at 35% of its fair value derived from projected future cash flows, Fortis is a value play with solid quality indicators. While debt to equity could be lower at 1.1, a 36-month beta of 0.07 indicates a stock that doesn’t budge an inch, no matter the market.

By mixing silver, banking, infrastructure, and energy, a new investor can get a quick handle on the TSX. While the investment opportunities by no means end there, this style of diversification can help to lower the risk of overexposure and capital loss.

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.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway and FORTIS INC.

More on Stocks for Beginners

Financial analyst reviews numbers and charts on a screen
Stocks for Beginners

1 Stellar Canadian Stock Down 47% From Its All-Time High to Buy and Hold Forever

Down sharply from its peak, this top Canadian stock is setting itself up for a long-term comeback backed by a…

Read more »

some REITs give investors exposure to commercial real estate
Stocks for Beginners

A 3.4% Dividend Yield? I’m Buying This Dividend Darling and Holding for Decades

Grab this dividend yield while it lasts, and never worry again while holding the top choice on the market!

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

1 Dividend Stock Down 14% to Buy for Lifetime Income

Buy it when it drops, hold it for forever. That's the kind of stock every investor should want.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

I’d Put All My $7,000 TFSA Contribution Into This Dividend Stock Right Now

If I'm looking to make some extra cash, then this dividend stock is my first stop.

Read more »

woman checks off all the boxes
Dividend Stocks

3 Red Flags the CRA is Watching if You’re Collecting Old Age Security

Don't give up on your summer plans! Instead, plan them out with a solid investment for your future.

Read more »

Stocks for Beginners

2 Top Canadian Stocks That Could Turn $10K Into $100K

If you're an investor looking to create massive income over a long period, these two stocks belong on your watchlist.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

I’d Put My Entire TFSA Into This 4.2% Monthly-Paying Dividend Stock

If you're a young investor, then you need cash. Now. That's what makes this dividend stock such a clear win.

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

1 Practically Perfect Dividend Stock Down 7% to Buy for Long-term Income

If you're worried about the future of your investments, then now may be the time to grab onto a stock…

Read more »