Diversifying one’s portfolio can be a daunting task. Indeed, finding high-quality growth and income stocks with excellent risk-adjusted returns is hard to do.
That said, the TSX happens to have a few excellent choices for long-term investors today. Here are two of my top picks I’d recommend investors consider right now.
As far as a combination of growth and income go, Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN) continues to be atop my list today. Indeed, I find Algonquin’s valuation very attractive in this context. Generally-speaking, utilities are low-growth, high-yield investments ideal for long-term investors. However, I expect Algonquin’s growth rate to outpace its peers for some time.
Well, the company has a growing renewable energy business, and has been aggressive in growing via acquisition in recent years. This has led to a hybrid business model (renewables plus core regulated utilities) which I think is among the best in the sector. The higher-growth tilt Algonquin provides is a key reason to be optimistic about future dividend increases and capital appreciation over the long-term.
Like its utilities peers, Algonquin remains a defensive long-term holding as well. The company’s cash flows are extremely stable, and are likely to grow at an industry-beating pace over the long haul. Indeed, I think investors looking to park some cash for the long-term and earn a reasonable total return can’t go wrong with this one.
WPT Industrial REIT
As far as REITs go, WPT Industrial REIT (TSX:WIR.UN) continues to be a top pick of mine.
One reason for this is the company’s size. WPT is the second-biggest publicly traded real estate investment in Canada. The trust’s size and business model has provided extremely stable cash flows throughout the pandemic.
Additionally, being a key player in industrial real estate (the asset class I’m most bullish on in the real estate sector) helps. The company’s got tremendous secular catalysts underpinning the tenants in its buildings (e-commerce being the primary catalyst at play), providing for excellent cash flow growth prospects long-term.
Personally, I think WPT deserves a higher premium due to the impressive quality of its underlying real assets. Additionally, the company’s 4.9% bond-like dividend yield is about as good as it gets from a quality perspective in the REIT space.
Indeed, as economic activity continues to pick up coming out of this pandemic, the need for industrial real estate will remain strong. Couple this with strong e-commerce growth long-term, and investors have a long-term winner in WPT.