Investing doesn’t have to be hard. Finding the right mix of investments for your long-term portfolio can be a frustrating and confusing venture. This is particularly true for new investors, who may be overwhelmed by a number of factors to consider. Fortunately, there is hope for investors starting on the path to retirement. Starting is easy, assuming you know where to look.
In fact, finding a solid set of core investments and investing in them early removes much of the legwork. But what stocks should form that solid core? Let’s take a look at some viable options to consider.
Every portfolio needs a solid defense
Much like building out a playoff-winning team, you need to start with your defensive backline. This is where the appeal of Fortis (TSX: FTS)(NYSE: FTS) comes into play. Fortis is one of the largest utilities on the continent. The company has multiple operation regions across Canada, the U.S., and the Caribbean.
So, then what exactly makes Fortis a great and easy investment option? That comes things to its lucrative business model. Utilities like Fortis generate and distribute power to the areas the company serves. Long-term contracts that span decades define the power and compensation to be provided.
In other words, as long as Fortis provides the power, it earns a steady and recurring stream of revenue. It doesn’t get any easier, but it does get better.
That steady revenue stream allows Fortis to invest in and upgrade its facilities, including transitioning to renewable energy. That recurring stream also allows Fortis to pay out a healthy and growing quarterly dividend.
That dividend currently works out to a tasty 3.36%, and Fortis has provided annual healthy upticks to that dividend for 48 consecutive years.
A $30,000 investment in Fortis will earn $1,000 income during the first year. New investors reinvesting those dividends back into Fortis can supercharge that growth until needed thanks to compounding.
Banking your future on another winner
Continuing the sporting reference, the best defense is often a great offense. In investing terms, that’s a near-perfect description of what Bank of Montreal (TSX: BMO)(NYSE: BMO) can offer. Canada’s big banks are some of the best options to consider for your portfolio.
BMO is neither the largest nor most well-known of Canada’s banks. It does however have three compelling reasons why new investors will want to jump on this stock.
First, BMO, like all its big bank peers, has a stellar domestic network. That network reported a net income of $1,004 million in the most recent quarter, reflecting a whopping 34% year-over-year improvement. That solid domestic network allows the bank to expand internationally, leading to my second point.
BMO continues to expand, focusing on the U.S. market. Net income from the segment amounted to $681 million, reflecting an 18% improvement over the prior year. Additionally, late last year, BMO announced it was expanding further into the U.S. through the acquisition of Bank of the West. The US$16.3 billion deal will add nearly US$150 billion in loans and deposits as well as millions of customers.
More importantly, the acquisition will expose BMO to the California market for the first time, and bring with it massive long-term growth potential.
Finally, let’s talk dividends. BMO has been paying out dividends for well over a century. That dividend currently works out to an appetizing 3.63% yield. As with Fortis, reinvesting those dividends will allow the investment to grow uninterrupted until needed. Again, great and easy investing doesn’t need to be hard.
Using that same $30,000 initial investment, BMO will earn just shy of $1,100 in the first year alone.
Starting is easy. Buying and forgetting can be too!
No investment is without risk. Fortunately, the two stocks noted above are great long-term holdings with both growth and income-earning potential. They also both offer superb defensive appeal, making them great options for any well-diversified portfolio.
In short, buy them, hold them, and forget about them for a decade or more. Starting is easy, but you do need to start.
