Often, the best stock returns are achieved from buying and adding shares of wonderful businesses opportunistically and holding the shares patiently.
The two best Canadian dividend stocks for income
You can get secured returns from periodic dividends generated by wonderful businesses like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP). You can sleep well at night knowing that they pay sustainable dividends through economic cycles irrespective of stock market volatility.
Spanning two decades, through the last two recessions, BNS stock sustained or increased its payout. It provides the juiciest dividend yield of 4.5% among the big Canadian banks, which makes it an attractive income stock.
BIP has only publicly traded on its own through one recession. However, the business has operated for decades before that. Its business model is proven to be rock solid.
BIP’s infrastructures, such as data centres, transmission and distribution utilities, and railroads, are critical to the global economies they serve. Consequently, it was able to maintain its dividend-growth streak since its inception. Currently, it yields 3.7% and it aims to increase its cash distribution by 5-9% a year.
If either dividend stock corrects substantially by 20-30%, back up the truck to lock in massive dividend yields.
Three top Canadian growth stocks to buy and hold
Lightspeed POS (TSX:LSPD)(NYSE:LSPD) stock is sometimes referred to as an earlier version of Shopify (TSX:SHOP)(NYSE:SHOP) stock. Both stocks have done well in the last few years thanks to being part of the growth trend in businesses shifting much of their sales to e-commerce.
Data by YCharts.
In the last 12 months, Lightspeed increased revenues by 94% on gross margins of 57%. In the same period, Shopify doubled its revenues on gross margins of 53.5%.
Both stocks are unstoppable, helped by tailwinds in e-commerce. So, investors should consider buying shares on pullbacks and consolidations to accumulate a sizeable position for their long-term investment portfolios. An allocation of approximately 5% in the industry could be reasonable if you seek exposure to outsized growth.
Another area with at least five years of tailwind growth is renewable gas. Greenlane Renewables (TSX:GRN) uses multiple technologies to upgrade biogas systems, helping waste producers, gas utilities, and project developers around the globe turn a low-value product into a high-value, low-carbon renewable resource.
The growth stock experienced a healthy correction after the stock rallied more than 280% in merely a few months. It appears to be ready for a strong rebound.
GRN data by YCharts. One-year chart.
The company’s last-12-month revenues increased by 164% to $31.8 million. It illustrated strong growth momentum with its Q1 2021 revenue rising 316%. Additionally, it possesses a sales order backlog of $37.7 million at the end of Q1 2021. After the quarter ended, it signed another contract of $9.8 million to turn landfill gas into renewable natural gas.
The Foolish investor takeaway
Buy and hold a diversified portfolio of growth stocks balanced by dividend stocks for incredible long-term total returns potential. Growth stocks like Lightspeed, Shopify, and Greenlane Renewables will likely be more volatile and require more of your attention to keep up to date with their businesses. You can expect much less maintenance for stable dividend stocks like Bank of Nova Scotia and Brookfield Infrastructure.
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.
The Motley Fool owns shares of and recommends Lightspeed POS Inc and Shopify. The Motley Fool recommends BANK OF NOVA SCOTIA, BROOKFIELD INFRA PARTNERS LP UNITS, and Brookfield Infrastructure Partners and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Kay Ng owns shares of Brookfield Infrastructure, Greenlane Renewables, and Shopify.