No-commission-fee online trading platforms like Wealthsimple reduce the threshold for investors to enter the market. Specifically, Wealthsimple allows investors to trade Canadian stocks for free on the TSX. It also allows partial-share purchases, which means with $25, you have a lot of choices of stocks — even the ones with stock prices greater than $25.
Here are three simple but proven TSX stocks you can consider buying now with as little as $25.
This big Canadian bank stock is a no-brainer core holding
Toronto-Dominion Bank (TSX: TD)(NYSE: TD) is a relatively simple and low-risk bank given its focus on retail banking. Close to 90% of its earnings are from its North American retail businesses — 56% in Canadian Retail and 33% in U.S. Retail. In its 2021 annual report, it highlighted that according to Global Finance, TD is the safest bank in North America.
TD Bank stock also has a standing culture of dividend payments that’s 165 years long! Its 10-year dividend–growth rate of 9.2% is also terrific. Its payout ratio is estimated to be sustainable at about 43% of earnings this fiscal year. Additionally, it has a massive reserve of retained earnings that’s $67 billion and can be used to pay dividends if needed, such as during a recession.
TD stockholders surely get paid to own the quality business. At writing, TD stock offers a solid yield of 4.2%. At $84.41 per share at writing, the bank stock trades at a discount of roughly 13% from its normal long-term valuation.
One simple TSX stock for growth
Despite the market correction, Constellation Software (TSX: CSU) stock is still one of the best-performing TSX stocks for total returns in the long run. Its five-year total returns are about 25% per year. This means the tech stock more than tripled investors’ money in the period. Its 10-year total returns are close to 37% per year — almost 23 times investors’ money in the period. In other words, it turned a $10,000 initial investment into approximately $229,780!
The tech company has done a tremendous job in consolidating vertical market software businesses. Its successful M&A strategy has led to impressive returns on equity (ROE). For example, its five-year ROE is about 47.7%.
Because of its high growth, the TSX stock trades at a high price-to-earnings ratio most of the time. Even after the market correction, it still trades at about 31 times earnings at $1,910 per share. However, its anticipated high earnings-growth rate can still make it an excellent stock to accumulate now. Analysts believe the stock is undervalued by about 25%, according to Yahoo Finance.
A simple retailer for awesome dividend income
Numbers don’t lie. Canadian Tire (TSX: CTC.A) stock is a solid specialty retailer that earns higher margins than grocery and convenience stores — its close cousins in the retail sector. It has increased its earnings per share by about 12.7% per year over the last decade.
Additionally, it has shared its profits in the form of a growing dividend. Its 20-year dividend-growth rate is about 13%. The company’s e-commerce sales are also becoming increasingly meaningful to its total sales.
The retail stock’s yield of 4% is attractive versus its history. Its trailing-12-month payout ratio is sustainable at about 24% of earnings. A large reserve of retained earnings also helps keep its dividend safe.
