I believe long-term investors shouldn’t worry much about the near-term volatility in the market. The economic expansion and a recovery in corporate earnings provide a solid foundation for long-term growth in some of the fundamentally strong Canadian companies. Notably, you don’t require a large sum of money to start investing in these top TSX stocks. So if you’ve got $300 to invest, here are the three long-term picks which I believe could handily outshine the benchmark index.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has consistently made its investors rich. Besides a noteworthy appreciation in its stock price, the utility company has enhanced its shareholders’ returns through increased dividend payments. Algonquin Power & Utilities’ adjusted EBITDA and earnings have grown at a healthy pace over the past several years, which in turn have driven its stock price and dividends.
Notably, Algonquin Power & Utilities’ regulated and contracted assets generate robust cash flows. Meanwhile, continued rate base growth augurs well for future growth. Algonquin Power & Utilities expects its adjusted EBITDA to increase by a compound annual growth rate (CAGR) 15% through 2025, reflecting solid rate base growth. Meanwhile, its earnings are projected to increase by a high-single-digit rate annually during the same period.
The company’s conservative business mix and high-quality earnings base strengthen my bullish view. Meanwhile, opportunistic acquisitions and expansion of the renewable power business bode well for future growth. Algonquin Power & Utilities announced a 10% hike in its annual dividends for 2021 and could continue to increase it at a similar rate in the coming years.
Enbridge (TSX:ENB)(NYSE:ENB) stock is an attractive long-term play at the current price levels. I believe the recovery in energy demand and continued momentum in Enbridge’s core business positions it well to deliver stellar revenues and cash flows in the coming years, which is likely to support the uptrend in its stock.
Enbridge’s diverse revenue sources, contractual arrangements, and a $16 billion secured capital program indicate that the company could continue to deliver robust distributable cash flows (DCF), which is expected to drive its future dividend payments. Notably, the energy infrastructure company hiked its annual dividends for 26 years in a row. Furthermore, it has paid dividends for about 66 years.
I expect the recovery in Enbridge’s mainline throughput, good growth opportunity in the renewable energy business, and momentum in the gas business to support its financials. Besides, Enbridge expects its DCF/share to continue to increase by 5-7% in the future, indicating that it could continue to increase its dividends at a similar rate. It offers an annual dividend yield of over 7.2%, which is safe.
I expect the demand for Lightspeed POS’s (TSX:LSPD)(NYSE:LSPD) products and services to remain elevated amid increased spending on e-commerce channels and the continued shift of small and medium-sized businesses shift towards the cloud-based omnichannel payment platform.
I believe Lightspeed’s focus on innovation and geographic expansion positions it well to capitalize on the secular industry trend. Meanwhile, its strategic acquisitions are expanding its customer base and solidifying its competitive positioning in high-growth markets.
With its growing scale and value-added products, Lightspeed’s average revenue per user is expected to increase. At the same time, up-selling opportunities and its appetite for opportunistic acquisitions are likely to accelerate its growth and support the rally in its stock.
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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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool owns shares of Lightspeed POS Inc.